Copper and Base Metals: LME Daily — 2026-10-26
Copper prices have retreated to a five-week low as rising LME inventories and the end of a strike at Chile’s Centinela mine eased supply concerns, despite persistent structural deficits. Meanwhile, LME Week debates highlighted a sharp divergence between bullish AI-driven demand forecasts and slowing Chinese consumption, while Chilean copper output faces a deepening slump due to operational disruptions.
Copper and Base Metals: LME Daily — 2026-10-26
Top developments
Copper hits five-week low amid inventory build and strike resolution
Benchmark three-month copper on the London Metal Exchange fell 1.8% to $14,089 per metric ton on October 22, marking its lowest level in over five weeks. The decline was driven by continued inflows into LME warehouses, which alleviated immediate supply bottlenecks, and the resolution of a strike at Chile’s Centinela mine, which removed a key risk premium. Despite this short-term relief, analysts note that regional supply issues outside the US persist, keeping long-term structural concerns alive.
Chile’s copper production slump deepens due to operational failures
Chile’s Finance Minister Jorge Quiroz announced that the country’s copper production is expected to fall by 8% to 9% in 2026, a worsening outlook caused by deadly accidents, extreme weather, and aging infrastructure. Data from Cochilco indicates that major operators Codelco, BHP’s Escondida, and Spence accounted for 91% of the net output loss in the first half of the year. This supply shock contrasts with rising global inventory levels, creating a complex market dynamic where physical scarcity in key producing nations coexists with warehouse builds elsewhere.
LME Week debates challenge AI-driven copper demand narratives
At LME Week, a Triland Metals panel argued that expectations for copper demand from AI data centers and India are inflated, while China’s consumption is slowing. The panel highlighted deeply negative treatment charges (TCs) and recycling bottlenecks as signs of a shifting market structure, warning that the "strategic metal" narrative may be overstated. Conversely, other analysts at the event noted that data center copper demand is approaching 1 million tonnes, indicating a fierce competitive debate over future consumption drivers.
Aluminium sheds war premium while copper remains elevated
Standard Chartered analysts reported that aluminium has largely given up its "war premium," with prices normalizing as geopolitical tensions ease, whereas copper remains elevated due to structural supply constraints. The bank expects mixed results for base metals in the coming months, with copper’s resilience supported by the deficit outlook despite recent inventory builds. This divergence underscores copper’s unique position as a bottleneck metal in the energy transition, distinct from the broader base metals complex.
Local view
Chile (Spanish-language media): Local outlets reported that copper prices fell 1.23% for the week to $6.54 per pound, driven by risk aversion and the end of the Centinela strike. However, La Tercera noted that Goldman Sachs raised its price forecast, citing deficits from US-China competition. Additionally, Diario Financiero (via The Rio Times) highlighted that Codelco faces 16 of Chile’s 31 major mining wage talks in 2027, with a strike at BHP’s Escondida considered highly likely, posing a significant future supply risk.
China (Chinese-language media): Reports from Sohu and Sina Finance indicate that Shanghai Futures Exchange (SHFE) copper warehouse receipts are increasing, signaling ample domestic supply and exerting downward pressure on local prices. Despite this, the Shanghai-London ratio remains strong at 6.729, suggesting domestic strength relative to international markets. 21jingji reported that the global refined copper market is expected to face a surplus of 368,000 tonnes next year, challenging the persistent deficit narrative.
Context & numbers
- LME Copper Price: $14,089/mt (Oct 22), down 1.8%.
- LME Zinc: Led gains in overnight markets, rising 2.06%.
- Chilean Production Outlook: Expected to drop 8-9% in 2026.
- Codelco European Premium: Set at a record $350/ton for 2027, reflecting supply squeeze concerns in Europe due to US tariff diversions.
- Treatment Charges: Fastmarkets Asia-Pacific spot copper concentrate TC index reported at -$272.20/dmt (Oct 9), indicating intense competition for raw materials.
On the radar
- US Tariff "Collapse" Scenario: Macquarie Group warns that a collapse in copper prices is possible if US tariffs are ruled out, though they deem this less likely than a "limbo" scenario past January 1.
- Codelco Wage Talks: 16 major wage negotiations for 2027 are underway in Chile, with Escondida strike risk flagging as a critical supply threat for early 2027.
- COMEX Premium Watch: Traders are monitoring the widening price gap between COMEX and LME as a real-time gauge of US tariff risk, with December COMEX copper last at $6.50/lb.
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