The current price surge stems from a race to secure metal ahead of potential US tariffs, pulling record volumes into domestic warehouses. Jeff Currie, co-chair of Abaxx Markets, notes that the physical economy is effectively repricing scarcity. He argues that even if global stockpiles exist, they remain stranded in the wrong locations, rendering them inaccessible for essential infrastructure projects like power grid expansions and AI-driven data center construction.

Adam Gillard, managing director in commodity sales at Goldman Sachs, highlights the anomaly of seeing both record inventory levels and record prices simultaneously. With the US having over-imported approximately 730,000 metric tons year-to-date, LME term structures have tightened significantly. Smelters are struggling to offset low treatment charges, as available metal outside of China and the US remains scarce. Despite this, Michael Cuoco of StoneX Financial maintains that the combination of robust industrial demand and ongoing mining output challenges will likely sustain a tighter market balance for the foreseeable future.