Commodity trading giant adds fuel to the fire: Mercuria was reported to have planned to withdraw over 40,000 tons of copper from LME warehouses

A piece of news from a commodity trading giant has added fuel to the recent surge in copper prices. If the news is true, it will exacerbate market concerns about a global copper supply shortage, potentially driving copper prices to new historical highs.

According to media reports on Thursday, December 4th, Eastern Time, Swiss commodity trader Mercuria has issued a notice planning to withdraw over 40,000 tons of copper from the Asian warehouses of the London Metal Exchange (LME), valued at approximately $460 million based on recent prices.

Some insiders revealed to the media that Mercuria canceled or marked over 40,000 tons of copper stored in LME warehouses in South Korea and Taiwan on Tuesday, December 2nd. This move will increase the premium of spot copper contracts relative to three-month copper futures prices, reflecting the growing demand for physical copper among traders. Mercuria declined to comment on this matter.

Coincidentally, recent analysis pointed out that on Wednesday, the cancellation of warehouse receipts in LME's Asian regional warehouses reached 50,725 tons, a record high since 2013.

The day before the news broke, on Wednesday, LME copper trading prices had already rebounded significantly. On that day, London copper closed up $342, an increase of nearly 3.08%, closing at $11,488 per ton, and briefly touching a historical high of $11,540 during the session, marking the first time in history that it broke $11,500 intraday. This was the third day in the last four trading days that this copper contract set a closing record.

On Thursday, London copper slightly retreated, closing down $38, a drop of over 0.3%, at $11,450 per ton, with a cumulative increase of about 30% for the year.

The main driver behind the recent record highs in copper prices is the market's heightened expectations of a copper supply shortage. This is partly due to disruptions in copper mines in the two major copper-producing countries, Indonesia and Chile, as well as accelerating demand. At the same time, a large amount of metal is flooding into the U.S. market due to expectations of tariffs imposed by the Trump administration, putting global inventories in other regions at risk of depletion. Analysts believe that the surge in canceled warehouse receipts in LME's Asian warehouses mainly reflects two driving forces: U.S. tariff expectations and cross-market arbitrage opportunities.

Mining Disruptions Intensify Supply Tightness

On the fundamental level, a series of mining disruptions from Chile to Indonesia have tightened supply this year. The latest signs of tension emerged on Wednesday.

Ivanhoe Mines has reduced its production expectations at the Kamoa-Kakula large mining area in the Democratic Republic of the Congo, which is still recovering from floods earlier this year. Glencore has seen a 40% drop in production since 2018 and has also lowered its production targets for next year, but stated it is seeking to roughly double production over the next decade.

Most of the copper in the LME storage network comes from China or Russia. Copper production in China has been restricted by U.S. import tariffs, while Russian copper is banned from entering the U.S. However, this supply can still serve Asian customers, so copper flowing into countries like Chile or Japan can be transshipped to the U.S.

On Wednesday, all metal futures traded on the LME generally rose, with LME tin leading the way with an increase of over 4% after two consecutive declines. LME tin closed up $1,740, an increase of over 4.45%, at $40,780 per ton, marking the fourth day in the last six trading days that it set a new three-year high The rise in tin prices at the end of the year is due to severe supply constraints from Myanmar and Indonesia, the world's largest and second-largest tin producers, while the demand expectations from the electronics and new energy sectors remain strong, leading to an extremely tight supply-demand balance in the market.

Tariff Expectations Trigger Global Supply Restructuring Mercuria Warns of "No Copper Available"

Copper prices have risen over 30% this year, with the recent surge primarily driven by uncertainties surrounding U.S. tariff policies. In February, U.S. President Trump formally proposed tariffs on copper for the first time, pushing U.S. copper imports to a historic high. In late July, he stated that tariffs would be limited to copper processing products and promised to reassess whether to impose tariffs on commodity-grade copper by 2027.

This decision has had a significant impact on the physical market. As U.S. futures prices soared, traders accelerated shipments of copper to U.S. ports. Producers also announced that they would charge record premiums to European and Asian customers next year, effectively compensating buyers for the additional profits they could obtain from sales to the U.S.

Mercuria recently warned that these trade dynamics could trigger a severe global supply shortage in the first quarter of next year and predicted that copper prices would further break into unknown territory.

Wall Street Journal mentioned last week that Mercuria's head of metal business, Kostas Bintas, described the current situation as a "great opportunity" for copper bulls, emphasizing that if the current trend continues, other regions of the world will face a dilemma of "no copper available."

TD Securities senior commodity strategist Dan Ghali stated, "In the first half of next year, the ongoing threat of tariffs is most certain in the copper market, providing a compelling catalyst for price increases. The microstructure of the market will ensure that the motivation to extract metals from global inventories continues for months, inadvertently depleting or shifting global stocks."

Divergent Views on Copper Price Trends Among Institutions

Although copper prices have surged this year, there are differing views on the outlook. Goldman Sachs' report on Wednesday conveyed some cautious sentiment, stating that the surge in copper prices above $11,000 per ton would be short-lived, as global metal supplies remain sufficient to meet demand.

Analysts at Goldman Sachs, including Aurelia Waltham, wrote in the report: "The recent rise in copper prices is largely based on expectations of future market tightness rather than current fundamentals. We expect the current surge above $11,000 will not be sustained."

Goldman Sachs predicts that copper supply will exceed demand by about 500,000 tons this year, noting a "substantial slowdown" in Chinese demand in recent months, and forecasts that there will be no shortage in the copper market until 2029.

Goldman Sachs raised its copper price expectations for the first half of next year, stating that U.S. tariff trading will support prices, but suggested that higher regional premiums and tighter LME spreads could prevent inventories outside the U.S. from falling to "extremely low" levels.

Goldman Sachs expects copper prices to be "constrained" between $10,000 and $11,000 per ton in 2026 However, Mercuria's Bintas insists on a bullish stance. He pointed out that although Chinese buyers are currently hesitant about high prices, they will ultimately be forced to accept them. He stated that prices that seem very high today may appear very low in a few weeks.

Mercuria expects that the pace of copper imports in the United States in the first quarter of 2026 will be comparable to the record levels of the second quarter of 2025, when imports exceeded 500,000 tons