Copper hits new record high as zero-fee smelting deal highlights supply tightness

Copper prices climbed to a fresh record high on Monday, supported by speculative buying and following news of a zero-fee processing deal involving a Chinese smelter, which underscored mine disruptions and the risk of supply shortages.

Benchmark three-month copper on the London Metal Exchange (LME) rose 0.6% to $11,955 per metric ton by 11:00 GMT, after touching a record high of $11,996.

Copper on the LME has surged about 36% so far this year, driven largely by concerns over mine-related issues that could lead to a supply deficit next year.

Those supply concerns were reinforced on Friday, when Reuters sources said Chilean miner Antofagasta had agreed with a Chinese smelter on zero treatment charges for copper concentrates for 2026 — the lowest level ever agreed in annual negotiations.

Treatment charges typically fall when supply is tight.

“A large part of this is about supply-side tightness, but the broader context is that markets in general look very strong, which shows there is a lot of liquidity in the system,” said Dan Smith, managing director at Commodity Market Analytics.

Global equities rose broadly on Monday, while oil prices also advanced, and gold and silver posted new record highs.

Smith added that while momentum continues to attract speculative flows into copper, there are signs that demand is beginning to soften at these elevated price levels.

“There appears to be a slowdown on the demand side. Electric vehicle sales are no longer growing strongly, and there is emerging weakness on the consumer side of the Chinese economy,” he said.

The most-traded copper contract on the Shanghai Futures Exchange (SHFE) closed the daytime session up 1.7% at 94,320 yuan ($13,397.92) per ton.

Nickel was the top performer on the LME, rising 1.6% to $15,040 per ton, following reports last week that the country plans to cut mine output in 2026.

Nickel on the Shanghai exchange rose for a fourth consecutive session, reaching its highest level in more than a month at 121,360 yuan.

Among other metals, aluminum on the LME gained 0.6% to $2,961.50 per ton, its strongest level since May 2022, while zinc rose 0.4% to $3,084. By contrast, lead fell 0.4% to $1,977, and tin slipped 0.5% to $43,030.