Key Moments
- LME three-month copper has traded above $14,000/t, moving close to record levels as nearby market conditions tighten.
- Tom-next and cash/3m spreads have surged to premiums of $75/t and $545/t, respectively, underscoring acute tightness in spot supply.
- US-bound shipments ahead of potential tariffs, along with Chinese buying, have drained LME inventories, which remain near multi-month lows.
Spreads and Price Action Reflect Intensifying Squeeze
Analysts Ewa Manthey and Warren Patterson at ING report that three-month LME copper has climbed above $14,000/t, putting prices within reach of the record highs seen earlier this year. They note that the advance is being driven less by broad-based sentiment and more by tightening conditions in the nearby segment of the market.
According to the analysts, the structure of the forward curve has become increasingly stressed. The LME copper tom-next spread moved to a premium of $75/t yesterday, which they describe as the widest level since January, as the ongoing supply squeeze gathered momentum in the run-up to possible import tariffs. At the same time, the cash/3m copper spread traded at a premium of $545/t yesterday, providing a clear signal of scarcity in spot material.
| Indicator | Latest Level | Commentary |
|---|---|---|
| 3-month LME copper price | Above $14,000/t | Approaching record highs reached earlier this year |
| Tom-next spread | $75/t premium | Widest since January, reflecting a growing supply squeeze |
| Cash/3m spread | $545/t premium | Signals significant tightness in spot copper availability |
Inventory Draws and Regional Flows Tighten Physical Market
The analysts attribute much of the current tension in the market to shifting physical flows and constrained warehouse stocks. They state that shipments into the US ahead of a potential refined copper import tariff, together with ongoing Chinese buying, have depleted inventories held in the LME warehouse network and tightened prompt supply.
While they acknowledge that LME stocks have registered a slight increase recently, Manthey and Patterson emphasize that total inventories remain close to multi-month lows. They add that indicators from the physical market continue to signal that metal availability is limited, reinforcing the strength seen in time spreads and spot premiums.
Outlook: Support from Structural Demand Themes
Looking ahead, the ING analysts argue that the existing supply tightness is likely to continue underpinning prices in the near term. They see particular support if end-use demand associated with electrification, data center development, and grid-related investment holds up. In their view, these structural themes, combined with already constrained prompt supply, are set to keep copper well supported for now.
“In base metals, copper prices pushed higher, with three-month LME copper trading above $14,000/t and approaching the record highs reached earlier this year.”
“The rally continues to be driven by tightening nearby market conditions. The LME copper tom-next spread surged to a premium of $75/t yesterday, marking the widest spread since January, as a growing supply squeeze intensified ahead of potential import tariffs. Meanwhile, the cash/3m copper spread traded at a premium of $545/t yesterday, highlighting tightness in spot supplies.”
“Ongoing shipments to the US ahead of a potential refined copper import tariff, combined with Chinese buying, have reduced available inventories in the LME warehouse network and tightened prompt supply. While LME stocks saw a modest increase recently, inventories remain near multi-month lows and physical market indicators continue to point to limited metal availability.”
“Near-term supply tightness is likely to keep the market well supported, particularly if demand linked to electrification, data centre expansion and grid investment remains resilient.”
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