Key Moments
- ING analysts report that physical copper demand and tightening London Metal Exchange (LME) warehouse conditions have been supporting prices.
- Cancelled warrants jumped by more than 23kt in a single day, lifting cancellations to about 43% of total LME inventories as on-warrant stocks dropped to multi-month lows.
- Most recent cancellations have been concentrated in Taiwan, South Korea, and Singapore, as shipments are redirected to the US ahead of a review of copper import tariffs.
Analysts See Fundamentals Backing Copper Prices
ING analysts Warren Patterson and Ewa Manthey point to robust underlying fundamentals in the copper market, emphasizing that strong physical demand and tightening warehouse dynamics on the London Metal Exchange are lending support to prices. They highlight a notable increase in cancelled warrants, particularly across Asian locations, alongside a continued drawdown in available exchange stocks as material is redirected to the US in advance of a review of import tariffs.
LME Warehouse Dynamics Tighten
“In base metals, copper found support from tightening LME warehouse dynamics. Cancelled warrants surged by more than 23kt on Monday — the largest one-day increase since May — after ten consecutive sessions of declines.”
The analysts underscore that the sharp daily rise in cancelled warrants follows a period of ten straight sessions in which cancellations had been decreasing, marking a clear shift in recent inventory behavior on the exchange.
Concentration of Cancellations in Asia
“Most cancellations have been reported in Taiwan, South Korea and Singapore. The move pushed cancelled warrants to around 43% of total LME inventories.”
The bulk of the latest activity has been centered in these Asian hubs, contributing to a substantial share of total LME stocks now being earmarked for withdrawal. This pattern underscores the regional strength in physical offtake and its impact on accessible exchange inventories.
Physical Demand and US Shipment Diversions
“It highlights strong physical demand and continued shipment diversions to the US ahead of the Trump administration’s review of copper import tariffs.”
The analysts link the inventory developments to firm end-user demand and ongoing redirection of cargoes toward the US market, reflecting strategic shipment decisions ahead of the anticipated policy review.
On-Warrant Stocks and Inventory Trends
“Meanwhile, on-warrant stocks fell to their lowest level since February, while total LME inventories extended their decline for an 18th consecutive session.”
The continued reduction in on-warrant material, combined with an 18-day streak of falling total LME inventories, adds to the evidence of a tightening supply backdrop.
LME Copper Inventory Snapshot
| Metric | Latest Indication |
|---|---|
| One-day change in cancelled warrants | Surged by more than 23kt |
| Share of cancelled warrants in total LME inventories | Around 43% |
| On-warrant stocks | At lowest level since February |
| Total LME inventories trend | Declined for an 18th consecutive session |
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