The London Metal Exchange (LME) copper market is experiencing severe supply tightness, with spot prices skyrocketing as traders compete for dwindling warehouse stocks. On Tuesday, the cash-to-tomorrow spread—the premium for copper delivered in one day versus the next—briefly surged to $36 per ton, marking the widest gap since the historic 2021 supply crunch.
Although the spread narrowed by market close, other forward spreads continued tightening, signaling sustained pressure across the copper market. The supply squeeze comes ahead of Wednesday’s expiry for June contracts, when traders holding short positions must either deliver physical copper or roll over their positions at increasingly costly rates.
Contract Expiry Compounds Supply Pressures
Market analysts note that the widening tomorrow/next day spread reflects the mounting expense of deferring delivery obligations by just 24 hours. The LME’s warehouse copper inventories have been declining for months, but the approaching June contract expiry is amplifying the supply crunch to critical levels.
The current squeeze mirrors patterns seen during previous periods of copper shortages, when industrial users and financial investors competed for limited available metal. With global copper demand remaining robust amid the energy transition and manufacturing recovery, market participants anticipate continued volatility in the near term. The LME may face additional pressure to monitor positions and ensure orderly trading conditions as the June contract rolls off.
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