Copper Prices Hit Snag as Supply Squeeze Eases Gains

Copper prices rose by around 3% in July, but this gain was short-lived due to a supply squeeze in London Metal Exchange (LME) warehouses.

The available copper inventory in LME-registered warehouses dropped by 50% to 101,650 metric tons as some of the existing stock was earmarked for shipment, leaving a tight market.

This led to a $40 premium on the LME cash-over-three-month spread, indicating that buyers are willing to pay more for prompt delivery. This setup is known as backwardation, where the price of immediate delivery is higher than future deliveries.

However, demand signals were mixed, with China's factory activity weakening and the Yangshan premium steadying around $112 a ton, suggesting earlier urgency had cooled down.