Copper Prices Plummet Amid Surging LME Stockpiles

Copper prices have taken a hit, dipping to a two-week low after a surge in metal deliveries into London Metal Exchange (LME) warehouses. The influx of copper pushed available stockpiles up by almost 75% in just one week, alleviating fears of an immediate shortage.

The LME has two main copper prices: the standard three-month contract and the 'cash' contract for near-immediate delivery. When the cash price is significantly higher than the three-month price, it's known as backwardation, where buyers are willing to pay a premium for copper right now.

The gap between the two prices recently blew out above $500 a ton but has since eased to around $207. This shift is directly linked to the exchange's inventory updates, which saw 17,000 tons delivered into LME warehouses and another 18,650 tons of 'reverse cancellations', meaning metal that was scheduled for departure was put back into the pool.

The rapid increase in available copper has taken pressure off the market, causing the cash premium to shrink. This usually means that the headline three-month price will also soften, as the immediate supply squeeze fades away.