Copper has recently been among the top-performing metals after earlier weakness linked to its cyclical nature. Its price had also been weighed down by rising LME stockpiles, which have increased since mid-January and are now at their highest level since 2018.
Supply news has been mixed, adding near-term pressure. Panama’s government is set to allow the sale of stockpiles from a mining company whose copper mine was closed in 2023.
Panama is also expected to decide within the next few months whether the mine can restart, with a decision due by June. This could add extra supply to the market in the short term.
In Chile, the world’s largest copper producer, mining output has weakened. February production fell to its lowest level in 10 years.
The article says that if current economic fears fade, supply constraints may become the main focus again. It also states the piece was made with the help of an AI tool and checked by an editor.
Copper has had a strong run, but we see significant headwinds that could cap prices in the coming weeks. LME stockpiles are currently sitting near 185,000 tonnes, a level not consistently seen since the inventory builds back in 2018. This supply overhang suggests that further near-term rallies may struggle for momentum.
The situation in Panama adds to the uncertainty, with a government decision on restarting the major copper mine expected by June. From our perspective back in 2025, the mine’s closure in 2023 was a significant supply event, but the potential sale of its existing stockpiles could now add temporary downward pressure. We should prepare for volatility as the market anticipates this news.
For traders with a short-term outlook, this suggests considering strategies that benefit from a capped upside or a slight price dip. We see value in selling out-of-the-money call spreads on contracts expiring in the next couple of months. This approach allows us to collect premium while the market works through the high inventory levels and the Panama news.
However, we must not ignore the powerful underlying supply problems coming from Chile, the world’s top producer. The significant drop in Chilean production that we saw in early 2025 was not a one-off event, as the country’s state commission just revised its 2026 output forecast downward again. This points to a structural deficit that will likely dominate the market later this year.
This longer-term bullish outlook, driven by fundamental supply constraints, makes accumulating longer-dated call options an attractive strategy. With China’s latest manufacturing PMI showing modest expansion at 50.8, broader economic fears are beginning to ease, creating a favorable backdrop for a supply-driven rally. We are looking at contracts expiring in September and December 2026 to position for this potential move.
