A handful of traders now hold claims on more copper than the London Metal Exchange can readily deliver, and the squeeze is touching the metal behind power grids, EVs, and AI data centers.
Copper stockpiles inside London Metal Exchange warehouses fell for 42 straight trading days in August, the longest losing streak since 2014. What's left is not as available as the headline number suggests. Roughly 205,000 tonnes sat in the system near the low point, and nearly half was already cancelled for withdrawal.
According to Bloomberg's reporting on the squeeze, large long positions had built up against a shrinking pool of deliverable metal. One trader held a dominant warrant and cash position in the LME's disclosure bands, while two others also held large claims. You read that right. A market used by miners, manufacturers, hedge funds, and industrial buyers was suddenly leaning on a very small group of position holders.
The price told the same story. Spot copper traded as much as $370 a tonne above September futures in recent weeks, while the cash-to-three-month spread blew out to as much as $545 a tonne before easing, Bloomberg reported on August 19. That is the kind of number traders remember because it changes behavior fast.
This is not a normal market.
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The squeeze came from physical metal, not just screens #
Traders responded the way they always do when a squeeze turns dangerous. They moved metal back into the system. Bloomberg reported that one of the largest copper squeezes on record eased after traders, including Trafigura, delivered metal to LME warehouses, lifting readily available inventories by more than 20,000 tonnes in one day. Shanghai Metals Market later reported that on-warrant copper stocks rose by around 63,000 tonnes over three days as fresh deliveries and re-warranted metal came back into the exchange network.
That inflow helped. It did not make the problem vanish.
The scramble traces back to Washington. With a decision on refined copper import tariffs still hanging over the market, traders shipped huge volumes of metal into the United States ahead of any new levy. Bloomberg reported that more than 200,000 tonnes arrived at US ports in July, the largest monthly figure in IHS Markit shipping data going back to 2014. In the first two weeks of August, about 56,000 tonnes more arrived.
China has pulled on supply too. Smelters there have faced tight concentrate feedstock, and Asian physical demand has kept drawing metal away from exchange warehouses. Both pulls hit at once, and London's warehouses paid for it.
The exchange has already tightened its position-management framework. The LME's own materials show new front-month lending rules and position-management arrangements came into force in July 2026, requiring dominant long holders to lend metal back into the market when positions become too large against available stock. That matters here because the memory of nickel in 2022 still hangs over the exchange. Nobody wants another disorderly failure in a benchmark contract.
The AI trade has a copper problem #
None of this is abstract if you're watching the AI buildout. Copper is the wiring inside the data centers, substations, transformers, EV motors, and grid upgrades this cycle depends on. When the market for immediate delivery gets this tight, the cost does not stay trapped on a trader's screen. It works its way into cables, electrical gear, and the schedules of projects that already need more power than utilities expected to supply.
Frankly, the AI story has been too clean on this point. Companies talk about chips, models, cooling systems, and power purchase agreements. They talk less about the metals that have to show up before a data center can turn on. Copper is one of them. The LME squeeze makes the point bluntly: a global boom can still jam on a warehouse receipt.
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Prices have eased from the worst moments of the squeeze. The imbalance is still the thing to watch. LME Insight noted on August 21 that total stocks had risen to 235,975 tonnes after fresh deliveries. On-warrant stocks climbed to 158,750 tonnes. That is better than panic. It is not abundance.
So watch the warrants, not just the copper price. If cancelled metal keeps leaving and US tariff uncertainty keeps pulling shipments across the Atlantic, the next flare-up will not need much imagination. It will only need one tight expiry and too little metal in the right warehouse.
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