Key Moments
- Copper on the LME dropped below $14,000/t, marking its steepest single-day fall since 23 July as supply pressures eased.
- On-warrant LME copper inventories climbed by 20,025 tonnes to 123,100 tonnes, the largest daily build since 7 April and the sixth consecutive increase.
- The LME cash/3M copper spread narrowed to $248/t, while speculative net long positions were cut by 6,340 lots to 53,914 lots.
Supply Relief Drives Sharp Price Pullback
ING’s commodities team reports that copper prices on the London Metal Exchange (LME) have reversed sharply, slipping below $14,000/t as a jump in on-warrant inventories has eased the earlier supply squeeze. The retreat in prices has been accompanied by a compression in spreads and a reduction in speculative net long exposure, pointing to a cooling of bullish sentiment in the near term.
“LME copper prices fell below $14,000/t yesterday, posting their sharpest decline since 23 July, as fresh deliveries into LME warehouses eased a prolonged supply squeeze.”
Inventory Build Eases Tightness
According to ING, the key driver behind the move has been a pronounced rise in exchange-registered stock.
| Metric | Latest Move | Resulting Level | Context |
|---|---|---|---|
| On-warrant LME copper inventories | +20,025 tonnes (daily) | 123,100 tonnes | Largest daily increase since 7 April; sixth straight session of gains |
| LME cash/3M copper spread | Narrowed | $248/t | Reflects improved availability of material |
| Speculative net long copper positions (COTR) | -6,340 lots | 53,914 lots | Breaks a two-week run of increases |
“On-warrant copper inventories rose by 20,025 tonnes, the largest daily increase since 7 April, extending gains for a sixth consecutive session to 123,100 tonnes.”
“The increase in stocks helped alleviate tightness after inventories had been depleted by strong shipments to the US, driven by tariff-related arbitrage opportunities.”
Spread Compression Signals Looser Market Conditions
The strengthening of available stocks has filtered quickly into the structure of the LME copper curve.
“Reflecting the improved supply situation, the LME cash/3M copper spread narrowed to $248/t, while the tom-next spread also retreated after recently reaching levels last seen during the 2021 copper squeeze.”
The easing of both the cash/3M and tom-next spreads indicates that the acute tightness seen previously has moderated as fresh metal has reached LME warehouses.
Positioning: Speculative Longs Trimmed
The shift in fundamentals and spreads has also prompted changes in speculative positioning.
“The latest COTR data showed speculators cut net long copper positions by 6,340 lots to 53,914 lots, ending a two-week streak of increases despite higher copper prices.”
ING’s commodities team interprets these moves as evidence that some investors are paring back exposure as the immediate supply squeeze unwinds, even though prices had been higher prior to the latest correction.
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