Copper inventories at the London Metal Exchange (LME) have plummeted by more than 51% in just four months, sparking a buying frenzy and causing spot copper prices to soar. Since mid-February, inventories have dropped from approximately 270,900 tons to 132,400 tons as of June 5. In June, the decline continued, with inventories falling by 10,000 tons on June 9, 950 tons on June 11, and 7,150 tons on June 16.
The sharp drop in inventory has left buyers scrambling for supplies. Traders competed fiercely for the dwindling stock, driving spot copper prices significantly higher.
On Tuesday, the contract expiring within one day traded at a premium of $36 per ton over the contract expiring the next day, the widest spread since 2021. Although the premium narrowed near the close, the medium and long-term spreads continued to tighten.
Market analysts suggest that the inventory decline is driven by multiple factors. Firstly, traders anticipated that the United States would impose tariffs on copper, prompting a large-scale transfer of inventory from the LME to the US. Secondly, mining challenges in some copper-producing regions and increasing demand for copper in industries like new energy have further tightened supplies.
Related Topics:
