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Key LME copper spread spikes to highest level since 2021 squeeze
Spot copper prices surged to trade at a huge premium over later-dated futures on the London Metal Exchange, with a closely watched one-day spread reaching levels not seen since an historic supply squeeze in 2021.
Copper contracts expiring Wednesday briefly traded at a $100 premium to those expiring a day later, in a structure known as backwardation that typically signals rising spot demand. The so-called Tom/next spread was at a narrow discount on Monday, and the spike was among the largest ever seen in pricing records starting in 1998.
The surge creates a fresh bout of turmoil in the LME copper market, after a breakneck rally that lifted prices to record highs above $13,400 a ton earlier this month. Traders have been piling into the market as mines have faltered and a surge in shipments to the US has drained copper supplies elsewhere, while many investors are betting on a jump in demand to power the burgeoning artificial-intelligence industry.
The Tom/next spread is closely watched as a gauge of demand for metal in the LME’s warehousing networking, which underpins trading in its benchmark futures contracts. The advance came ahead of the expiry of the LME’s main January contracts on Wednesday, with the Tom/next spread providing a final opportunity to trade those positions.
Data from the LME showed that there were three separate entities with long positions equal to at least 30% cumulatively of the outstanding January contracts as of Friday, and if held to expiry the positions would entitle them to more than 130,000 tons of copper — more than the amount that’s readily available in the LME’s warehousing network.
Holders of short positions, meanwhile, would need to deliver copper to settle any contracts held until expiry, and the spike in the Tom/next spread exposes them to hefty losses if they look to roll them forward instead. The move to $100 a ton took the spread to the highest level since a major supply squeeze in 2021, which prompted the LME to roll out emergency rule changes to maintain an orderly market.
Structural constraints
The Tom/next spread often flares into backwardation in the run-up to the expiry of monthly contracts, but such extremes are a rarity — partly because the LME has rules in place that force large individual holders of long positions to lend them back to the market at a capped rate.
The spread had earlier been trading at a premium of $65 a ton, which equates to 0.5% of the prior day’s official cash price. That’s the maximum level participants can lend at if they hold positions in inventories and spot contracts that are equal to between 50% and 80% of readily available stocks. The spread later fell in the final minutes of trading, and closed at $20 a ton at 12:30 p.m. London time.
While the Tom/next spread is highly volatile, copper’s broader price curve is also signaling more structural supply constraints in the broader copper industry, with backwardation seen in most monthly spreads through to the end of 2028. Many analysts and traders expect the market to be in a deep deficit by then, in a trend that could drain global inventories and push prices sharply higher.
Global inventories are at sufficient levels for now, but much of the stock is held in warehouses in the US, after traders shipped record volumes there in anticipation of tariffs. The once-in-a-lifetime trading opportunity was fueled by a surge in copper prices on New York’s Comex exchange, but the recent spike in spot prices on the LME has left US futures trading at a discount.
This week, there have been small deliveries of copper into previously empty LME warehouses in New Orleans, and the surge in the Tom/next spread could incentivize further deliveries into US depots. Data from the LME shows that there were about 20,000 tons of privately held copper that could be readily delivered into New Orleans and Baltimore as of Thursday, while more than 50,000 tons were also held off-exchange across Asia and Europe.
LME copper inventories rose by 8,875 tons to 156,300 tons on Tuesday, driven by deliveries into warehouses in Asia and a small inflow in New Orleans. The turmoil in price spreads had little impact on the LME’s benchmark three-month contract, with prices falling 1.6% to settle at $12,753.50 a ton as US President Donald Trump’s push to take control of Greenland sparked a broad selloff in stock markets.
(By Mark Burton)
Jiangxi Copper plans $3.6 billion bond sales to fund expansion
Credit: Jiangxi CopperJiangxi Copper Co., a leading Chinese smelter, said it planned to issue up to 25 billion yuan ($3.6 billion) of bonds that could fund an expansion of mining after prices rallied to a record.
The company will issue up to 15 billion yuan of medium-term notes, as well as 10 billion yuan in super short-term commercial paper, it said in an exchange filing. Proceeds will be used to repay debt, supplement working capital, or fund merger-and-acquisition activity, it said.
Copper hit a record above $13,000 a ton this month, supported by optimism about the outlook for demand amid the energy transition and data-center build-out. Supply snarls at mines, and concerns that the US may impose a tariff on imports have also boosted the metal.
Globally, companies are hunting for copper reserves, or seeking to combine with rivals to expand their access to the commodity. Last month, Jiangxi Copper agreed to buy Australian copper miner SolGold Plc for about $1 billion, with the smelter seeking to boost ore self-sufficiency after record low processing fees crimped margins.
This week, major Chinese miner CMOC Group Co. raised $1.2 billion from the sale of convertible bonds to expand its overseas mining and processing assets, as well as to improve working capital.
Jiangxi Copper shares in Hong Kong hit a record earlier this month.
Jiangxi Copper Co., a leading Chinese smelter, said it planned to issue up to 25 billion yuan ($3.6 billion) of bonds that could fund an expansion of mining after prices rallied to a record.
The company will issue up to 15 billion yuan of medium-term notes, as well as 10 billion yuan in super short-term commercial paper, it said in an exchange filing. Proceeds will be used to repay debt, supplement working capital, or fund merger-and-acquisition activity, it said.
Copper hit a record above $13,000 a ton this month, supported by optimism about the outlook for demand amid the energy transition and data-center build-out. Supply snarls at mines, and concerns that the US may impose a tariff on imports have also boosted the metal.
Globally, companies are hunting for copper reserves, or seeking to combine with rivals to expand their access to the commodity. Last month, Jiangxi Copper agreed to buy Australian copper miner SolGold Plc for about $1 billion, with the smelter seeking to boost ore self-sufficiency after record low processing fees crimped margins.
This week, major Chinese miner CMOC Group Co. raised $1.2 billion from the sale of convertible bonds to expand its overseas mining and processing assets, as well as to improve working capital.
Jiangxi Copper shares in Hong Kong hit a record earlier this month.
Vale’s copper ambition is to produce 1 million tons a year
Stock image.Vale SA’s base metals unit wants to eventually produce 1 million tons of copper by developing existing assets, exceeding an output target for 2035.
Major mining firms such as Anglo American Plc and Rio Tinto Group are racing to increase production of the metal through acquisitions. Vale Base Metals is focused on deposits it already owns in Brazil to join the ranks of the world’s largest copper suppliers.
“These assets have been talked about for decades,” Vale Base Metals chief executive officer Shaun Usmar said in an interview last week at a mining industry gathering in Riyadh. “They just haven’t been unlocked.”
While the subsidiary of the Brazilian iron ore giant has a target to approximately double annual copper production to 700,000 tons by 2035, the CEO said he’s “increasingly confident we’ve got an organic pipeline to go well beyond that.” The ambition is “to become a one million ton a year producer,” according to Usmar.
The only miners whose copper output exceeded 1 million tons in 2024 were Freeport-McMoRan Inc, BHP Group, Codelco and Zijin Mining Group Co. Ltd.
Copper is among the most coveted metals for mining executives who are anticipating significant growth in consumption driven by electrification and the wider energy transition. Prices have hit repeated records since late last year amid concerns that supply will lag demand.
Toronto-based Vale Base Metals’ other main product is nickel, which is mined at operations in Brazil, Canada and Indonesia.
Vale said last month that its base metals unit is also considering a joint copper project with Glencore Plc in Canada. It could cost as much as $2 billion to develop their neighboring properties in the Sudbury Basin, in a venture that would produce about 42,000 tons of copper a year, Vale said.
(By William Clowes)
Vale SA’s base metals unit wants to eventually produce 1 million tons of copper by developing existing assets, exceeding an output target for 2035.
Major mining firms such as Anglo American Plc and Rio Tinto Group are racing to increase production of the metal through acquisitions. Vale Base Metals is focused on deposits it already owns in Brazil to join the ranks of the world’s largest copper suppliers.
“These assets have been talked about for decades,” Vale Base Metals chief executive officer Shaun Usmar said in an interview last week at a mining industry gathering in Riyadh. “They just haven’t been unlocked.”
While the subsidiary of the Brazilian iron ore giant has a target to approximately double annual copper production to 700,000 tons by 2035, the CEO said he’s “increasingly confident we’ve got an organic pipeline to go well beyond that.” The ambition is “to become a one million ton a year producer,” according to Usmar.
The only miners whose copper output exceeded 1 million tons in 2024 were Freeport-McMoRan Inc, BHP Group, Codelco and Zijin Mining Group Co. Ltd.
Copper is among the most coveted metals for mining executives who are anticipating significant growth in consumption driven by electrification and the wider energy transition. Prices have hit repeated records since late last year amid concerns that supply will lag demand.
Toronto-based Vale Base Metals’ other main product is nickel, which is mined at operations in Brazil, Canada and Indonesia.
Vale said last month that its base metals unit is also considering a joint copper project with Glencore Plc in Canada. It could cost as much as $2 billion to develop their neighboring properties in the Sudbury Basin, in a venture that would produce about 42,000 tons of copper a year, Vale said.
(By William Clowes)
Peru’s copper production down 11.2% year-on-year in November
Open-pit copper mine in Peru. Stock image.Peru’s copper production declined 11.2% year-on-year in November of 2025, reaching 216,152 metric tons, the energy and mining ministry said on Monday.
Between January and November copper production increased 1.6% compared to the same period in 2024, to 2.5 million metric tons, the ministry said in a preliminary report.
Peru, the world’s third-largest producer of the red metal, expects to produce about 2.8 million metric tons of copper in 2025, up from 2.74 million tons in 2024, according to the latest government estimates.
Copper production in Peru has remained almost stable since 2023, due to a lack of new projects and declining ore grades in large mines.
(By Marco Aqino; Editing by Cassandra Garrison)
Peru’s copper production declined 11.2% year-on-year in November of 2025, reaching 216,152 metric tons, the energy and mining ministry said on Monday.
Between January and November copper production increased 1.6% compared to the same period in 2024, to 2.5 million metric tons, the ministry said in a preliminary report.
Peru, the world’s third-largest producer of the red metal, expects to produce about 2.8 million metric tons of copper in 2025, up from 2.74 million tons in 2024, according to the latest government estimates.
Copper production in Peru has remained almost stable since 2023, due to a lack of new projects and declining ore grades in large mines.
(By Marco Aqino; Editing by Cassandra Garrison)
Rio Tinto copper output rises as merger talks loom
Rio Tinto’s (ASX, NYSE, LON: RIO) copper production rose 5% in the fourth quarter, as a surge from Mongolia’s Oyu Tolgoi underground expansion more than offset weaker output at Chile’s Escondida, the world’s largest copper mine.
Copper accounted for about a quarter of Rio’s half-year profit, still dwarfed by iron ore but central to its long-term growth ambitions and the strategic backdrop to its ongoing takeover talks with Glencore (LON: GLEN), with a Feb. 5 deadline to either make a firm offer or walk away.
At Escondida, fourth-quarter production fell 10% from a year earlier due to lower grades and reduced concentrator output, but Oyu Tolgoi delivered a 57% year-on-year jump that underpinned the group’s overall copper gain.
“Rio Tinto finished the year with a strong performance in key commodities, including fourth-quarter Pilbara iron ore up more than 4% versus our estimate, a quarterly record, and a 4% beat in copper,” BMO Capital Markets mining analyst Alexander Pearce said in a note. “However, the near-term focus remains on the potential merger with Glencore.”
The UK’s strict takeover rules also meant that Glencore’s name was absent from Rio’s production report, yet the Swiss miner’s influence hangs over the results as negotiations continue on valuation, leadership, structure and asset composition.
Among the options under discussion is a carve-out of coal assets, potentially into a separately listed Australian vehicle, echoing BHP’s (ASX, LON: BHP) South32 demerger a decade ago.
Glencore’s coal operations across NSW, Queensland, central Africa and Latin America would make up about 8% of a combined group’s $45.6 billion in EBITDA, while its trading arm, accounting for roughly 9% of earnings, remains another sensitive element.
Analysts have also floated alternatives, including a pre-deal coal spin-off by Glencore or a narrower bid by Rio focused solely on copper assets.
Market timing
Mark Freeman, managing director of the near-century-old Australian Foundation Investment Company (AFIC), has questioned the timing of chasing Glencore’s copper pipeline with prices near record highs, warning that assets often appear most attractive at the top of a mining cycle.
RBC mining analyst Ben Davis struck a similar note, arguing that the strength of the copper market has shifted perceptions around a potential tie-up. “Clearly the mining cycle is alive and well,” he wrote in a note last week.
What was widely dismissed as speculative talk a year ago has, in his view, gathered momentum amid a strong rally and tightening resource supply, with recent share price moves signalling that investors now expect a firm offer.
The analyst added that Glencore’s copper portfolio, particularly its 44% stake in Chile’s Collahuasi mine alongside Anglo American (LON: AAL), represents the crown jewel Rio is seeking.
Iron backbone
Rio’s Pilbara iron ore operations hit a quarterly record, with shipments rising 7% to 91.3 million tonnes, while full-year exports landed at the lower end of guidance as the company recovered from weather disruptions.
The miner also began exporting from Guinea’s Simandou project and expects sales of 5 million to 10 million tonnes in 2026, compared with 323 million to 338 million tonnes forecast from the Pilbara this year. Elsewhere, aluminium output increased 2%, lithium production reached a record driven by Argentina, and titanium volumes fell 6% as Rio prepares to divest the business.
Since chief executive Simon Trott took the helm last year, Rio has moved to refocus operations, cut costs and rein in earlier ambitions in lithium. “Implementation of our stronger, sharper, simpler way of working continues, and is delivering results and creating value,” Trott said.
