The global copper market had a supply surplus of 147,000 tons in the first eight months of the year, according to the International Copper Study Group. This surplus is mainly due to increased mine output and stronger metal production, especially in China and the Democratic Republic of Congo, which together make up 57% of global copper production. Although this surplus is smaller than the 477,000-ton surplus from the same period last year, the supply has been improving since June. However, the recent rise in copper prices linked to supply concerns may not fully reflect the actual situation. As of August 2025, the global copper market shows a surplus of 147,000 tons. This is a significant decline from last year’s 477,000-ton surplus at the same time. The supply situation has been getting better since June, indicating that the reasons supporting higher prices may not be as strong as before. This improvement in supply is evident in exchange inventories, which traders should monitor closely. For instance, LME-registered warehouse stocks have risen to over 155,000 tons this month, increasing steadily from the low levels seen in the second quarter. This growth in physical inventory shows that production is outpacing immediate demand. On the demand side, China—responsible for more than half of the world’s copper—shows signs of a fragile recovery. The Caixin Manufacturing PMI for September is just 50.1, suggesting that factory activity is barely growing. Slow demand from China makes it hard to justify a sustained increase in prices. Given this situation, the recent price rise seems disconnected from the underlying fundamentals, creating an opportunity. Traders might consider buying put options to benefit from a potential price drop below key support levels. Another strategy could be selling out-of-the-money call options or setting up bear call spreads, betting that further price gains will be limited. We’ve seen similar cases before, such as in 2022 when fears about supply disruptions briefly pushed prices up, only for them to correct as the market refocused on overall weak economic demand and actual inventory levels. This historical trend highlights the need for caution for those chasing the current price increases. The recent price spike may have also raised implied volatility in the copper options market. This makes selling option premiums particularly appealing for those who expect prices to either drop or stay stable in the coming weeks. A decrease in volatility, known as “vega crush,” would benefit these strategies, even if copper prices simply stabilize.

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