Copper is on its longest weekly winning streak since 1994, while the physical market underneath the rally keeps getting thinner.

Benchmark prices on the London Metal Exchange recorded a tenth consecutive weekly gain through last Friday, trading near $14,300 a ton and within reach of the record $14,527.50 set in January. On Comex, prices topped $6.70 a pound in August, a fresh all-time high. Behind the run is inventory that keeps draining: LME warehouse stocks fell for 42 straight days through mid-August, the longest stretch since 2014, and nearly half of what remains is already earmarked for withdrawal. The tightness comes as demand from electrification — power grids, electric vehicles, and the data centers behind the AI build-out — keeps growing while new mine supply struggles to keep pace, a mismatch that has made copper a focal point for both policymakers and investors.

Tuesday marks a year since the disaster that helped set this squeeze in motion. On Sept. 8, 2025, roughly 800,000 tons of wet material flooded Freeport-McMoRan's Grasberg mine in Indonesia, the world's second-largest copper source, killing two workers and forcing a force majeure that is still working through the supply chain. Freeport has cut its 2026 output guidance for the complex by roughly a third, and a full recovery is not expected before 2027 or 2028. That timeline means the mine's lost output will hang over the market for years, not months, and Grasberg's progress toward restoration is one of the most closely watched variables in global supply.

Data from the International Copper Study Group show global mine output fell 1.1% in the first half of the year, with Codelco and Freeport both posting double-digit declines. Chile, the world's top producer, logged its weakest second quarter in at least 19 years and has cut its 2026 forecast twice, to a 2.6% decline. Codelco's Andes Norte expansion at El Teniente, meant to help offset losses from last year's fatal tunnel collapse, is not due to reach production until 2029. The gap between today's shortfalls and those late-decade project start dates illustrates a broader industry problem: new copper mines typically take a decade or more to develop, so supply responses to high prices are slow by nature.

"It's declining grades at existing operations. It's tired, very, very old assets," BlackRock's Evy Hambro said of the sector last month.

In early August, Congo added a new wrinkle, banning exports of copper and cobalt concentrate to force more processing onshore. The order affects only a small slice of Congo's copper trade, most of which already leaves the country as refined cathode, but it still pushed LME prices up 1.8% the day it became public. Reuters columnist Andy Home called the reaction proof that "Doctor Copper's panic attack is unlikely to be the last." The episode also fits a wider pattern of resource-rich governments, from Indonesia to Chile, pushing for more domestic processing of their ores, adding a policy layer of risk on top of the physical one.

The Commerce Department's deadline to recommend whether to extend tariffs on refined copper passed June 30, and more than two months later the White House still has not decided. Traders are not waiting: roughly 200,000 tons of refined copper flooded into the U.S. in July alone, the largest monthly inflow on record, pushing Comex inventories past 1 million tons as buyers race to get ahead of a possible 15% duty that could take effect as soon as January. The White House's decision, and whether the tariff takes effect in January, is the next scheduled flashpoint for the market.

None of this points to an immediate shortage of refined metal. Morgan Stanley still expects refined output to inch up almost 1% this year even with mines producing less, as smelters lean harder on scrap. Mine supply is the bigger worry, and Wall Street is split on how bad it gets. Citigroup sees copper reaching $15,000 a ton by year end, and as high as $17,000 if AI-driven demand or a manufacturing rebound outpaces what the ground can deliver.

"Everyone is investing in copper, everyone likes copper," Anglo American's Ruben Fernandes said. Supply, he added, will come — the question is how quickly.

By Michael Kern for Oilprice.com