Highlights

  • LME cash copper settled at US$13,992/t on 10 Nov, 4.7% below its 28 Oct level, while LME stocks rose about 39% in under a month.
  • US midterm results hit AI data-centre and Tariff trades, hot US Inflation revived Fed hike bets, and tariff-driven shipments piled metal into LME sheds in the US.
  • China stays physically short with record premiums, so the fight is between US-held surplus stocks and Chinese scarcity; watch the SHFE November expiry and LME stock flows.

Warehouses are filling up in America while Chinese buyers pay record premiums, and the US election has knocked the shine off copper's AI story.

What happened

Copper ended the LME session on 10 November at US$13,992 a tonne for cash metal, down 0.3% on the day and 0.8% on the week. The bigger picture is a slow leak: cash copper has lost 4.7% since 28 October, when it settled at US$14,675.50.

The more striking number sits in the warehouses. LME copper stocks reached 316,625 tonnes on 10 November, up from 228,000 tonnes on 14 October, a jump of about 39% in under a month.

US copper futures touched US$6.20 a pound on 10 November, a four-month low, before bouncing back towards US$6.30 on 11 November. Even so, LME cash metal still trades US$162 above the three-month contract, a backwardation that shows buyers are paying up for metal they can get now.

Why it happened

The US midterms changed the copper story. Democrats won both chambers of Congress, tech stocks sold off and a US-listed semiconductor ETF fell more than 12%, feeding fears that tougher scrutiny of AI data centres could slow one of copper's hottest Demand themes. Texas governor-elect Gina Hinojosa has called for a moratorium on new data-centre projects, the same report noted.

The vote also cooled tariff bets. Traders had been moving metal into the US ahead of a possible 15% refined-copper Import tariff from 2027. A Democratic Congress makes that tariff look less likely, which weakened bids for US copper futures.

That trade explains the stock surge. LME warehouses in New Orleans, Baltimore and Mobile held 223,300 tonnes of the exchange's 318,675 tonnes on 5 November, a 70.1% share and "the highest since March 2019". With the COMEX premium over London narrowing, some of that metal went into LME sheds on US soil rather than COMEX ones.

Then came the rates hit. Hotter-than-expected US inflation data on 10 November pushed markets to price possible Federal Reserve hikes, lifting the dollar and borrowing costs for debt-funded AI infrastructure firms. Fed officials were already sounding hawkish, with Hammack saying policy needs to move to a restrictive stance.

How it plays out

The paradox is geographic. Visible LME stocks look comfortable, but most sit in the US while China is short. Chinese mainstream cathode stocks stood at about 62,600 tonnes on 5 November, against 134,400 tonnes a year earlier, and Shanghai spot premiums hit a record RMB2,615 a tonne on 6 November. Yangshan import premiums reached US$210-217.50 a tonne.

Winners are holders of prompt metal inside China and smelters able to sell cathode into those premiums. Losers are Chinese fabricators, who are buying only what they need, and anyone who stockpiled in the US for a tariff that may never come. If tariff odds keep fading, US-held metal could eventually flow back out and ease tightness elsewhere.

The raw-material squeeze has not gone away either. The copper concentrate treatment charge index sat at minus US$272.20 a tonne on 9 October, and Chilean mine output fell 7% in January-July. That caps how quickly smelters can respond to high premiums, and near-term tightness is unlikely to ease quickly.

Next week, watch the Shanghai November contract: CU2611 stops trading on 16 November, with delivery on 17-18 November, a real test of how tight China is. Also watch daily LME stock reports for any Reversal of US inflows, Fed speakers digesting the inflation data, and any word from Washington on the copper tariff.