Copper Hits Record Highs as Squeeze Risks and Supply Tightness Push Prices Up

Global copper prices continue to rise. On December 3, LME copper futures reached a record high of $11,540/ton; on December 4, Shanghai and international copper futures hit historic highs of ¥91,450/ton and $82,430/ton, respectively.

According to Fu Xiaoyan, Senior Director at Nanhua Futures Research Institute, the surge is driven by Fed rate cut expectations and regional copper inventory tightness. The advent of the AI era is expected to boost copper demand significantly, requiring sufficient copper imports, while global competition for resources increases regional supply risk.

Impact along the supply chain varies:

• Overseas mines capture most profits;
• Smelters with local copper resources are less affected, while those relying on external supply face higher impact;
• Copper processing enterprises face rising costs and low processing fees;
• Downstream copper consumers bear higher cost pressure.

Market expectations suggest copper prices may continue to rise, but volatility risk is high. Negative news or unmet demand could trigger significant corrections. In the short term, Shanghai copper may fluctuate around ¥90,000/ton, with a long-term target of ¥93,000–95,000/ton.

Core drivers for the price surge include squeeze risk and supply tightness:

• Global copper inventories concentrate in the U.S., while LME Asian warehouse cancellations increase supply concerns;
• Arbitrage opportunities and U.S. stockpiling keep copper in a potential squeeze scenario;
• Reduced investment in copper development and new demand from AI and renewables could further push prices up.

Short-term trading strategy: follow the trend, closely monitor Fed rate cuts, copper supply recovery, and whether AI/energy storage-related copper demand materializes.