Copper hits new peak after zero-fee smelter processing deal highlights shortages

LONDON: Copper prices rose to a record peak on Monday, supported by speculative buying and as news of a zero-fee processing deal involving a Chinese smelter highlighted mine disruptions and potential shortages.

Benchmark three-month copper on the London Metal Exchange was up 0.6% at $11,955 a metric ton by 1100 GMT, having touched a record of $11,996.

LME copper has surged 36% this year, largely on worries about problems at mines causing deficits next year.

Those supply concerns were underlined on Friday when sources told Reuters Chilean miner Antofagasta and a Chinese smelter agreed on a zero processing fee for 2026 copper concentrate, the lowest ever agreed in annual negotiations.

Processing fees decline when supply is constricted.

“A lot of it’s about supply-side tightness, but the broader context is that markets generally are pretty buoyant, it shows there’s a lot of liquidity in the system,” said Dan Smith, managing director at Commodity Market Analytics.

World shares rose broadly on Monday, oil ramped up, while gold and silver hit record highs.

Although momentum was still attracting speculative funds to copper, there were signs that demand was faltering at the high prices, Smith added.

“It feels like there’s a slowing down in terms of demand. EV sales are no longer growing strongly and there’s weakness developing within the consumer side of the economy in China.”

The most active copper contract on Shanghai Futures Exchange closed daytime trading up 1.7% at 94,320 yuan ($13,397.92) per ton.

Nickel was the best performer on the LME, rising 1.6% to $15,040 a ton after reports last week that the country will slash mine output in 2026.

SHFE nickel rose for a fourth straight session, touching a more than one-month high of 121,360 yuan.

Among other metals, LME aluminium gained 0.6% to $2,961,50, the strongest since May 2022, zinc added 0.4% to $3,084 while lead slipped 0.4% to $1,977 and tin shed 0.5% to $43,030.