Key Moments
- LME Copper extended gains for a sixth straight session before a modest pullback, supported by tight physical market conditions in China.
- Shanghai copper cathode inventories fell by 14,700 tonnes to 43,900 tonnes, the lowest level since December 2023, amid holiday-related restocking and seasonal demand.
- Net bullish copper futures positions dropped for a sixth consecutive week to 42,132 lots, even as prices moved higher.
Physical Market Strength in China Supports Copper
ING analysts Ewa Manthey and Warren Patterson highlight that London Metal Exchange (LME) Copper has continued to move higher, with gains attributed primarily to tight physical conditions in the Chinese market, shrinking inventories, and holiday-driven restocking activity. The metal logged a sixth consecutive session of advances on Tuesday, marking its longest run-up since May, before easing slightly on Wednesday morning.
According to the analysts, seasonal demand related to the upcoming Mid-Autumn Festival and National Day holidays has underpinned consumption. They note that Shanghai copper cathode inventories fell by 14,700 tonnes to 43,900 tonnes, described as “the lowest level since December 2023.”
They further observe that while imports of copper into China have risen, this has not translated into higher visible stock levels. Instead, volumes have largely bypassed storage facilities.
“While imported copper arrivals have increased, most material has flowed directly to fabricators rather than warehouses, keeping spot supplies tight.”
Positioning in Copper and Other Base Metals Remains Soft
ING’s commentary underscores a sharp contrast between strong physical fundamentals in China and relatively weak speculative participation across base metals. Despite the upward move in prices, investor positioning in copper futures has continued to retreat.
“Investor positioning across base metals remained subdued. According to the latest COTR data, net bullish copper positions fell by 3,981 lots to 42,132 lots, the lowest level since late March and marking a sixth consecutive weekly decline despite higher prices.”
The analysts also point to similar dynamics in other key base metals, where net long exposure has been scaled back.
“Aluminium net longs dropped by 11,623 lots to 77,423 lots, driven largely by long liquidation, while zinc net longs fell by 2,787 lots to 29,946 lots, extending their decline for a fourth straight week.”
Base Metals Positioning Snapshot
| Metal | Change in Net Longs (lots) | Latest Net Longs (lots) | Trend Detail |
|---|---|---|---|
| Copper | -3,981 | 42,132 | Sixth consecutive weekly decline; lowest level since late March |
| Aluminium | -11,623 | 77,423 | Drop driven largely by long liquidation |
| Zinc | -2,787 | 29,946 | Fourth straight week of falling net longs |
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