Copper Prices Plummet to Two-Week Low Amid LME Inventory Buildup

Copper prices have fallen for a third consecutive day, reaching a two-week low on Wednesday as inventories at the London Metal Exchange (LME) continue to build up. The benchmark three-month copper price on the LME dropped by 0.7% to $13,888 per metric ton in official open outcry activity.

The LME stock buildup is largely due to a surge in deliveries and reverse cancellations, with over 17,000 tons of copper inflows into LME warehouses on Tuesday, along with 18,650 tons of reverse cancellations. This has resulted in available LME copper stocks increasing by almost 75% over the past week to 158,750 tons.

Analyst Tom Price from Panmure Liberum attributes this buildup to traders seeking to capitalize on the premium of the LME cash copper contract over the three-month forward, which has created a backwardation of $176 per ton. He notes that more than half of Tuesday's deliveries and reverse cancellations were in the US storage hub of New Orleans.

Copper stocks on the US COMEX exchange continue to rise, standing at a record 670,273 metric tons, despite some small withdrawals. Price comments that 'this is just a transfer of metal from one exchange to another and drawing in some off-warrant' stock.