Copper Market Holds Firm as Exchange Stocks Stay Tight

Key Moments

Inventory Trends Underpin Copper Prices

ING analysts Warren Patterson and Ewa Manthey state that copper continues to find support from constrained inventories on the London Metal Exchange (LME) and solid flows into the United States. They point to a notable pickup in cancelled warrants, renewed withdrawals from LME warehouses, and elevated US premiums as key signals of tightness in the physical market.

At the same time, they note that record-high copper prices are starting to raise concerns about demand in China, even as the metal remains nearly 15% higher year-to-date.

LME Withdrawals and Cancelled Warrants in Focus

The analysts highlight that:

“Copper edged higher after fresh withdrawals from LME warehouses renewed concerns over tight exchange inventories. LME cancelled warrants increased by 51.4kt, the largest daily rise since May.”

They add that earlier inflows into LME warehouses had temporarily eased some of the strain in available stocks:

“Recent deliveries into LME warehouses helped ease some of the tightness. However, the latest withdrawal suggests that any recovery in inventories may prove temporary.”

According to them, the balance between deliveries and withdrawals remains central to market sentiment, as:

“Inventory movements remain a key focus, with exchange stocks still relatively low.”

US-Bound Flows and Market Vulnerability

The analysts also emphasize the role of US demand and associated physical flows in shaping price dynamics:

“Copper remains supported by strong metal flows into the US.”

With exchange inventories constrained and US-bound shipments robust, they conclude that current conditions leave prices exposed to further swings:

“For now, tight inventories and continued US-bound flows remain the dominant drivers, leaving the market vulnerable to further bouts of tightness and volatility.”

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