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Investing.com -- The U.S. copper price premium over the London Metal Exchange (LME) has increased 20% year-to-date, outpacing the 12% rise on the LME as trade uncertainty continues to affect markets. This price divergence comes as new supply disruptions emerge in global copper production.
A significant supply constraint developed when the Kamoa-Kakula mine in the Democratic Republic of the Congo temporarily halted operations after seismic activity caused flooding, limiting the availability of copper concentrate in the market. The disruption adds pressure to an already tightening supply situation.
Manufacturing purchasing managers’ indices remain below the 50-point threshold in major economies including China, Europe, and the United States, indicating contraction in the manufacturing sector. Despite this weakness, front-loaded demand ahead of US tariffs has partially supported copper consumption, particularly tightening markets outside the United States.
Chinese demand has shown resilience through midstream consumption, appliance sales, and state grid spending, while Beijing continues to implement supportive economic policies. These factors have helped maintain demand despite manufacturing weakness in major economies.
UBS forecasts copper supply deficits of 53,000 metric tons in 2025 and 87,000 metric tons in 2026, which the firm believes should limit potential price declines. Based on this outlook, UBS recommends selling downside in copper for yield enhancement during the second half of the year.
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