〔Overnight Brief〕Copper Backwardation Heads for Highest Since 2021 as Codelco Shutdown Reports Emerge; LME Holds $14,160, Policy Overhang Grows

Overnight Tape

• **LME closes:** Copper +$12 to $14,160/ton; aluminum -$6 to $3,252; zinc +$5 to $3,756; lead +$8 to $1,895; nickel +$39 to $16,815; tin +$340 to $56,194; cobalt flat at $56,290 ^[1].
• **Chinese night session:** International copper +0.47%, SHFE copper +0.49%, zinc +0.41%, tin +0.36%, aluminum alloy +0.24%, aluminum +0.08%, nickel +0.07%, lead -0.22%, alumina -0.19%, stainless steel -0.49% ^[2].
• **Zinc strength intraday:** LME zinc main contract was up more than 1% at $3,782.50/ton ^[3].

Copper Squeeze

• **[NEW] Backwardation building:** Bloomberg reports spot copper is surging above later-dated futures on the LME, with the spread heading for its highest since 2021 — a hallmark of a deepening supply squeeze ^[4].
• **[NEW] Codelco shutdown talk:** Sources say Codelco will close the Chuquicamata and Ministro Hales mines ^[5][6]. Thin sourcing: both reports rely on unnamed sources ^[5][6]. Separately, sources say Codelco appointed a vice president to oversee the El Teniente mine ^[7].
• The squeeze narrative fits the higher LME copper close, though aluminum's slip suggests the move is metal-specific, not broad-based ^[1][4].

Policy and Supply-Chain Crosscurrents

• **[ONGOING] IEA on diversification:** Critical mineral projects are being developed globally, but diversification is uneven; spending outside the top supplier is focused on mining, while refining and downstream capacity lags ^[8].
• **[NEW] Indonesia's budget tilt:** Indonesia's 2027 state budget is set to favor miners, EV makers, and battery producers, driven by President Prabowo Subianto's push to boost the commodity sector and slash reliance on imported fossil fuels ^[9].
• **[NEW] India's mining tax cap:** India's parliament passed a bill restricting state governments from imposing new taxes or cesses on mineral rights, aiming for a uniform tax framework after what the federal government called an excessive and uneven burden on miners ^[10].
• **[ESCALATED] Jharkhand pushback:** Chief Minister Hemant Soren urged PM Modi to reconsider, saying the state's Mineral Bearing Land Cess was expected to raise about 71.1 billion rupees ($744.97 million) a year and that mining revenue accounts for 84.9% of Jharkhand's finances ^[11].

What to Watch

• The Codelco shutdown reports are unconfirmed, so the next LME copper close will show whether the backwardation is a physical squeeze or a positioning move ^[5][4][6].
• Jharkhand's letter is a concrete fiscal challenge to India's new mining law, but the law has already passed ^[10][11].
• Check whether zinc's intraday breakout above $3,780 holds and whether aluminum's decline signals rotation out of metals, not a broad risk-off ^[1][3].