Copper set for biggest annual gain in 16 years, best performer among base metals

Copper was poised on Wednesday for its biggest annual gain since 2009, making it the best performer among base metals, as supply concerns and prospects of surging demand from the AI boom and energy transition powered a blistering rally.

The red metal, widely used in the power and construction sectors, is seeing a surge in investor interest due to its critical role in energy transition technologies and expanding infrastructure for artificial intelligence and data centres.

The benchmark three-month copper on the London Metal Exchange (LME) dipped 0.49% to $12,497 per metric ton by 0700 GMT, but was set to end the year with a more than 42% gain.

The most-traded copper contract on the Shanghai Futures Exchange ended the day up 0.84% at 98,240 yuan ($14,057.78) a ton, rising 33.27% this year.

Copper breached several key levels this year to notch record highs, with mine disruptions, including the suspension of Freeport's flagship Grasberg mine in Indonesia, underpinning the rally.

The London benchmark reached an all-time high of $12,960 this week, while the Shanghai contract set a record of 10,2660 yuan last week.

Expectations of tight refined copper supply outside the U.S. market, as a CME premium to the LME driven by U.S. tariffs, have been draining LME inventories and have shifted copper stocks to COMEX sheds.

Copper stocks in the COMEX warehouses <HG-STX-COMEX> have climbed to an all-time high of 490,722 tons, according to the exchange on Tuesday, up 426.75% so far this year.

The LME reported on-warrant copper <MCUSTX-TOTAL> volume at 149,475 tons on Monday, a 44.91% decline.

China's plan to regulate its ever-expanding copper smelting capacity and top Chinese smelters' plan to slash 2026 output also stoked supply worries.

Tin was poised to post the second-biggest annual gain among base metals.

Benchmark three-month LME tin declined 1.67%, but was set to end the year with a near 42% jump. The most-active tin in Shanghai posted a 0.45% daily dip but ended the year up 30.42%.

Tin's gain came as supply disruptions in Myanmar and Indonesia tightened flows into top consumer China.

Aluminium was also a winner for 2025, underpinned by China's capped smelting capacity. The London benchmark climbed 0.44% on Wednesday and was set for a more than 17% annual gain, while the Shanghai contract closed the day up 2.25%, ending the year up 14.65%.

Nickel was also set to post a yearly gain, its first since 2023, as the Indonesian government's plan to slash 2026 mining quota to support prices fuelled a dramatic rally in December.

London nickel declined 1.35% on Wednesday to $16,600 a ton, but was on track to end the year up more than 8%.

Shanghai nickel closed daytime trading up 2.44% at 132,850 yuan a ton, registering a 4.93% yearly gain.

Among other LME base metals, zinc dropped 0.24% and lead gained 0.22%.

Among SHFE base metals, zinc nudged 0.06% higher and lead lost 0.66%.