{"id":66692,"date":"2026-08-18T03:38:12","date_gmt":"2026-08-18T07:38:12","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/copper-spreads-surge-to-2021-highs-amid-acute-supply-squeeze-european-markets-mixed\/66692\/"},"modified":"2026-08-18T03:38:12","modified_gmt":"2026-08-18T07:38:12","slug":"copper-spreads-surge-to-2021-highs-amid-acute-supply-squeeze-european-markets-mixed","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/copper-spreads-surge-to-2021-highs-amid-acute-supply-squeeze-european-markets-mixed\/66692\/","title":{"rendered":"Copper Spreads Surge to 2021 Highs Amid Acute Supply Squeeze; European Markets Mixed"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>LME copper backwardation hit $543.50 per tonne<\/strong>, the widest spread between spot and three-month prices since the historic supply squeeze of <strong>2021<\/strong>.<\/li>\n<li><strong>European equity markets showed divergent performance<\/strong>, with the <strong>STOXX 600<\/strong> (<a href=\"\/stock\/SXXP\">SXXP<\/a>) slipping <strong>0.24%<\/strong> while the <strong>FTSE 100<\/strong> (<a href=\"\/stock\/UKX\">UKX<\/a>) edged up <strong>0.1%<\/strong>.<\/li>\n<li><strong>LME warehouse stocks fell for the 42nd consecutive day<\/strong>, reaching a critical low of <strong>204,975 tonnes<\/strong>, as metal is diverted to the U.S. ahead of potential tariff decisions.<\/li>\n<li><strong>Copper prices approached record highs<\/strong>, trading near <strong>$14,500 per tonne<\/strong> as short sellers scramble to cover positions ahead of monthly contract expiries.<\/li>\n<\/ul>\n<p>The London copper market is experiencing its most significant supply tension in five years. On <strong>August 18, 2026<\/strong>, the one-day spread for copper surged to <strong>$110<\/strong>, contributing to a cash-to-three-month premium that reached as high as <strong>$543.50 per tonne<\/strong>. This extreme <em>backwardation<\/em>\u2014where immediate delivery costs significantly more than future delivery\u2014indicates an acute shortage of available metal in exchange-registered warehouses.<\/p>\n<p>Inventory levels at the London Metal Exchange (LME) have plummeted by nearly <strong>50%<\/strong> since May. This drain is largely attributed to traders moving refined copper into the United States to get ahead of anticipated import tariffs from the <strong>Trump administration<\/strong>. While global inventories remain relatively stable, the concentration of metal in the U.S. has left the LME system vulnerable to a &quot;bidding war&quot; among short sellers.<\/p>\n<p>Major mining companies are seeing increased volatility as a result of these physical constraints. BHP Group (<a href=\"\/stock\/BHP\">BHP<\/a>) recently reported that it expects copper demand to grow by more than <strong>50 million metric tonnes<\/strong> annually by 2050, driven by the energy transition and AI infrastructure. Despite the long-term bullish outlook, the current price spike is being driven more by <em>near-term technical tightness<\/em> and short covering than a broad surge in industrial demand.<\/p>\n<p>In the equity markets, European shares struggled for a clear direction. The pan-European <strong>STOXX 600<\/strong> (<a href=\"\/stock\/SXXP\">SXXP<\/a>) declined <strong>0.24%<\/strong>, weighed down by a rise in sovereign bond yields and persistent energy price concerns. Conversely, the <strong>FTSE 100<\/strong> (<a href=\"\/stock\/UKX\">UKX<\/a>) managed a slight gain of <strong>0.1%<\/strong>, supported by its heavy weighting in mining and energy stocks that benefited from the firming commodity prices.<\/p>\n<p>Regional performance was impacted by a mix of corporate earnings and macroeconomic headwinds. While software heavyweights like SAP SE (<a href=\"\/stock\/SAP\">SAP<\/a>) have seen recent gains due to cooling inflation metrics, luxury and consumer-sensitive sectors faced pressure. Investors remain cautious as they weigh resilient European economic data against the risks of elevated borrowing costs and geopolitical uncertainty in the Persian Gulf.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways LME copper backwardation hit $543.50 per tonne, the widest spread between spot and three-month prices since the historic 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