Newsletter · · Ashutosh Agarwal

Copper Hits Records While Hedge Funds Short What Washington Is Buying - Materials Weekly - Week of August 9, 2026

For the week of August 2 to 9, 2026, copper set fresh all-time highs on tariffs and thin Chinese inventories, while guests across the mining tape kept returning to the same bottleneck: refining rather than mining, a step China still overwhelmingly controls, even as Washington spends billions building a domestic supply chain that hedge funds are shorting.

Materials Weekly

Week of August 9, 2026: Copper Hits Records While Hedge Funds Short What Washington Is Buying

Weekly notes on metals, critical minerals and the stuff farmers put on their fields, built entirely from the past seven days of podcasts (Aug 2–9, 2026).

Hello again. This was copper's week: it set fresh all-time highs, and almost every mining podcast spent time trying to explain why. But the more interesting story sits underneath it. In market after market, copper, rare earths, graphite, lithium, nickel, the guests kept landing on the same point: the hard part isn't digging the rock out of the ground, it's turning it into usable metal, and that step is overwhelmingly controlled by China. Meanwhile there's a genuinely odd standoff playing out: the U.S. government is spending billions to build a home-grown critical-minerals industry, and at the very same time hedge funds are betting against the companies it's backing. Add a diesel squeeze that's hurting farmers, fertilizer prices pulling in two directions at once, and a Middle East "deal" that keeps being one or two days away, and you have a full week. Let's dig in.

TL;DR

  • Copper made new all-time highs. It set a record monthly close in July and then new daily records this week, "up to like 670-some a pound," per The KE Report. One reason it's climbing: traders are hauling copper into the U.S. ahead of possible tariffs, draining everyone else's warehouses.

  • The real shortage is refining, not mining. Guests across five different metals kept saying it. The sharpest proof: copper smelters are so desperate for ore they're now paying to process it, per Dig Deep.

  • A strange split on critical minerals. Washington is buying (a new strategic reserve, a White House mining event, Pentagon contracts), while hedge funds are shorting the very U.S. companies being funded, per The Northern Miner Podcast.

  • Fertilizer is splitting in two. Nitrogen prices are falling; phosphate (DAP and MAP) is rising because China is exporting less of it, per AG Bull.

  • The diesel pain is "the dock, not the refinery." U.S. refiners are running flat out, but so much diesel is being shipped overseas that farm diesel is back above $4.30 a gallon heading into harvest, per AG Bull.

  • The Strait of Hormuz "deal" still hasn't happened. The Treasury Secretary said one was a day or two away; by Friday it still wasn't done, per Squawk Pod and AG Bull.

What's new this week

Copper set records: and the "why" is mostly about tariffs and China's empty shelves

Copper is the story of the week. On The KE Report's weekend show, newsletter writer Brien Lundin noted copper made "an all-time new monthly high, an all-time close" in July, then "made new all-time highs on the daily" this week, getting "up to like 670-some a pound." He framed it as the steadiest bull story in the whole commodity complex: "It's not going to be as dynamic as gold. But it is the most solid story out there." His long-term marker: "$8 copper probably sooner than I think."

Two forces are driving the near-term move. The first is a scramble ahead of possible U.S. tariffs. On CNBC's Closing Bell Overtime, strategist Philip Streible laid out the mechanics: "July's copper imports hit a 12-year high as traders look to get ahead of possible duties, with COMEX inventories now at a record." He added that London Metal Exchange warehouse stocks are "at five-month lows. And all of that is heading to China," the price spread has "gone into backwardation... the largest since January," and "200,000 tons flow into the U.S. ports here in July. It was the biggest monthly inflow in shipping data going back to 2014." (Backwardation is simply when metal for delivery today costs more than metal for delivery later, a classic sign of a tight, scramble-for-supply market.) Copper is up about 12% on the year, he said, and "it's the physical scarcity of copper that is really what's driving this story now."

The second force is genuine supply trouble. On The David Lin Report, Copper Giant CEO Ian Harris pointed out that Chile, the world's biggest producer, is "down 15%," and that even a small hiccup matters because global copper inventories at their historical high amount to only "like 15 days." Deadly storms in Chile pushed the price up intraday from "$6.26 to $6.34" as they spoke. On The KE Report's Nick Hodge episode, Hodge noted Chile's state producer Codelco has seen output "stair-step down and to the right over the past 10 years," peaking around 2016–17 and possibly missing its 2026 guidance.

There's also the AI angle. Brien Lundin cited a figure that "6% of the overall capex in a data center is simply copper, just copper metal." Ian Harris went further on how deep copper's role runs: "90% of all copper is used in electrification... any electron that gets to any final end use definitely travels over copper," and the share of copper demand tied to AI, which he'd once expected to be around 1%, is "now 4%" and only rises. He quoted mining financier Robert Friedland's line that "copper is the new safe haven", and noted that when war broke out this year, gold fell while copper rose.

The bottleneck almost nobody prices: turning ore into metal

If there's one theme that tied the whole week together, it's this: the West can dig up minerals, but it can't yet refine them at scale. That's true across the board, and the numbers are striking.

  • Copper: On Dig Deep, ATEX Resources' Chris Beer explained that "treatment refining charges are negative because copper smelting companies are so desperate for concentrate that they are willing to take a hit just to bring that concentrate to their smelter." In plain terms: the fee smelters normally charge miners has flipped, smelters are effectively paying for the privilege of processing ore. On The David Lin Report, Ian Harris put a number on the concentration of power: "about 60% of the world's smelting comes from one country" (China), while Chile and Peru together make up roughly 40% of mine production.

  • Rare earths and graphite: On the FT's Economics Show, the reporting was blunt: China controls "over 90% of the world's capacity" in rare-earth processing. Up until 2024, America's one big mine, Mountain Pass, was digging up rare earths in California and shipping them to China to be processed. On Disruptors, Nouveau Monde Graphite's Eric Desaulniers said China "refines more than 90% of the world's graphite into battery anode material", the black stuff that makes up the negative side of an EV battery.

  • The legal reality: On The Northern Miner Podcast, lawyer Rebecca Seidl-Inglesby of Baker Botts gave the cleanest summary of why this can't be fixed quickly: "an average copper mine takes 17 years from discovery to first production. In the US, with permitting, that can push the number to 29 years or 30 years... the raw material into that sentence is measured in decades, but the demand itself is measured in quarters." And even once you build a Western refinery, she noted, it "still has to be qualified by end users... 18 months, two years before it's purchasable" by a carmaker. Her one-line verdict, borrowed from a CSIS analyst: "a mine without a refinery, without a customer, is just a stranded asset."

The diesel squeeze is at the dock, and it's landing on farmers

This is a quieter story but a real one for anyone in agriculture. On AG Bull's Wiesemeyer episode, veteran analyst Jim Wiesemeyer explained that U.S. diesel is tightening, "and the culprit was not the refinery. It was the dock." American refiners are already running at "96 to 97 percent utilization" (essentially maxed out), yet diesel inventories are falling when they'd normally be building for harvest, sitting "around 12 percent below the five-year average." The reason: exports hit a record "1.884 million barrels a day," with foreign buyers in Europe, Turkey and Latin America "outbidding the U.S. market" because Russia, normally about 12% of the world's diesel exports, has slashed output. Ukraine has hit Russian refineries roughly 194 times this year, striking "24 of Russia's 34 large plants" and driving Russian crude runs to "the lowest since 2005."

The bill lands on farmers. Per AG Bull's fertilizer update, farm diesel now averages "$4.32 a gallon up 56.5 cents" from the prior report (Iowa $4.19, Illinois $4.44), with California over $7. As a partial buffer, Wiesemeyer expects the government to again suspend the Jones Act (the rule that goods shipped between U.S. ports must travel on expensive U.S.-flagged ships) before it expires August 16, likely a narrower "30 to 60 days" to get through harvest.

The debate: is copper a screaming buy, or a crowded trade about to snap?

Not everyone is bullish, and the most useful pushback came from Bloomberg Intelligence's Mike McGlone on Soar Financially. His argument, from a risk-manager's seat: yes, copper is up ~12% this year, but it has actually underperformed the S&P 500 since 2023 while trading at "about two times" the stock market's volatility. In other words, copper holders took on far more risk to earn less than a plain index fund. He also flagged crowding: hedge funds ("managed money") have been net long copper for about two years, and "all you need is a little flush in that. And you might get a chance to buy copper around five." His worry is that copper is now so tied to the stock market that if stocks wobble this fall, copper, and every other metal, goes down with them.

That's the honest tension in the copper trade right now. The bulls (Lundin, Harris, Hodge) argue the supply shortage is structural and multi-decade, so dips are gifts. The bear case (McGlone) isn't that the shortage is fake, it's that everyone already knows the shortage story, the trade is crowded, and price and positioning have gotten ahead of themselves. Both can be true: a great long-term story can still have a nasty air-pocket.

The same "has the rally run too far?" question is being asked about critical-minerals stocks, see below.

The names in play

A lot of specific companies came up this week. None of this is a recommendation, it's simply who the podcasts were talking about and why.

  • Copper producers and juniors. Nick Hodge said he bought Ero Copper (ERO), which was "up like 15% in... six days" (The KE Report). ATEX Resources, developing the Valeriano copper-gold district in Chile with Agnico Eagle as a 15% shareholder, touts unusually clean, high-grade ore, a 33% copper concentrate versus a global average of ~24% (Dig Deep). Meridian Mining made news with "blister copper" test results from its Cabaçal project in Brazil that came back "98.9%" pure versus a typical ~90%, a detail that matters because clean concentrate is easier to sell and finance (Mining Stock Daily).

  • Steel. Nucor (NUE) was "the stock of the day," breaking out 4.9% on "triple-digit earnings growth" and accelerating revenue, notable as a non-tech winner. Caterpillar (CAT) rose 5.6% but stalled at a key technical level (Stock Market Today With IBD).

  • The U.S. critical-minerals names, with a twist. On The Northern Miner Podcast, the striking headline was that "hedge funds have been increasing their bets against U.S. critical minerals companies", specifically U.S. Antimony (USAC), American Resources (ARC), and MP Materials, on the view that the government-fueled rally "may have run too far." MP tripled last year; USAC nearly tripled in 2025 after winning a Pentagon antimony contract worth up to $245 million. NevGold (NAU) is pitching a Nevada antimony-gold project it says can produce metal without a smelter (a big deal, since China dominates antimony smelting), with "7,400 tons of antimony at surface" against total U.S. production of "less than 1,000 tons... per year" (Stocks To Watch).

  • Battery-metals developers. Canada Nickel and Lifezone Metals (Cabanga project, Tanzania) argued Indonesia's new price discipline means nickel won't fall back to $15,000 a ton, the new floor is more like "$18,000 to $19,000" (Company Interviews); FPX Nickel made the same case (The KE Report). On lithium, Pursuit Minerals is building a deliberately small, low-cost project in Argentina at a "$6,521 per tonne" operating cost (Company Interviews). Nouveau Monde Graphite and First Phosphate are both trying to build Western battery-material supply chains with heavy government backing (Disruptors; WTR Small-Cap Spotlight).

Read-throughs (the connections worth noticing)

Washington is now a buyer and a backstop, but the market is skeptical. This week showed the U.S. government acting less like a cheerleader and more like a customer. President Trump held a mining roundtable announcing "$2 billion for battery factories, aluminum smelters and boron and scandium mines" (Closing Bell). The FT's Economics Show detailed "Project Vault," a strategic critical-minerals reserve that GM, Lockheed Martin and Alphabet have already signed onto (though no purchases have happened yet). And a new White House executive order is cracking down on the waivers that let defense contractors keep buying Chinese materials (Supply Chain Now). As Baker Botts' Seidl-Inglesby put it, governments have shifted from "grant makers" to "counterparties... taking equity, guaranteeing offtake, setting price floors." Yet hedge funds are shorting the beneficiaries. The bet against them isn't that the policy is wrong, it's that rebuilding these supply chains will take years, and China can crush new entrants by flooding the market whenever it wants.

The Strait of Hormuz is the hidden wire connecting everything. It ties together copper sentiment, nickel, fertilizer and diesel. Treasury Secretary Bessent told Squawk Pod a deal to reopen the strait could come "today or tomorrow," with "hundreds, if not 1,000 ships" waiting to get out carrying "not just energy, it's fertilizer, it's refined products." Oil dropped several dollars a barrel live on air as he spoke. But by Friday, per Wiesemeyer, there was still "no agreement", and Iran "viewing the Strait of Hormuz as their leverage." One under-appreciated ripple: Indonesia's nickel production has a sulfur problem, because "four of the top five suppliers of sulfur to Indonesia... are on the wrong side of the Strait of Hormuz," which has already helped push a key type of Indonesian nickel output (called MHP) down "around 37%" from its 2025 peak (Company Interviews).

AI is now a commodity demand story, not just a chip story. Data centers are showing up on the demand side of copper (6% of a data center's build cost is raw copper), nickel, and lithium. On Transmission, battery expert Marek Kubik noted grid-storage demand is "really, really accelerating" with "AI hyperscale data centers," which, along with lithium carbonate roughly tripling off its lows to "$24, 25" a kilogram, has started to nudge battery prices up after years of falling. Pursuit Minerals put a number on it: grid batteries are now expected to make up "30% of market share" of lithium demand (Company Interviews).

What changed from last week

  • Copper broke out. Last week the discussion was around $6.30–6.35 a pound; this week it set record all-time highs, with COMEX futures printing new records and one podcast citing $6.87 intraday. The story shifted from "tariff pull-forward" to "outright records plus real Chilean supply losses."

  • Fertilizer split in two. Last week the theme was fertilizer falling across the board. This week nitrogen kept falling (anhydrous ammonia down $56.88 to ~$1,014/ton, urea down ~$15), but phosphate reversed higher, DAP and MAP both rose because China is exporting less of it. That's a new divergence worth watching.

  • The diesel story sharpened. Last week diesel was a background worry; this week it became a specific, quantified squeeze, refiners maxed out, record exports, and a clear "it's the dock, not the refinery" diagnosis heading into harvest.

  • Still no Hormuz deal. The "imminent agreement" narrative is now several weeks old and keeps slipping, which itself is becoming the story.

  • Steel got a live earnings winner in Nucor, a change from recent weeks, when steel and aluminum coverage was thin. Aluminum, though, was again essentially absent as a standalone topic this week.

Coverage gaps to flag honestly: No podcast this week featured MP Materials, Lynas, or USA Rare Earths as its main subject, the rare-earth material came through policy and analysis episodes rather than company interviews. There was no dedicated aluminum discussion, and no CF Industries, Nutrien or Mosaic company commentary (the fertilizer coverage was farm-economics and price-tracking rather than issuer-specific).