Copper Prices Soar on Tight Physical Market Conditions

Copper prices have climbed for six consecutive sessions, their longest winning streak in four months. This rally is driven by tight physical market conditions in China and dwindling inventories in Shanghai and London.

Chinese buyers are stocking up ahead of holidays and smelter shutdowns, which will further reduce supply. Meanwhile, COMEX warehouses hold 696,204 tonnes of copper, a significant portion of global stock, but this is no longer growing due to the import rush before tariffs were imposed on imports.

The inventory picture is tight in China, with copper stocks in SHFE warehouses having slid 70% since early June. Imported metal arriving in China has gone straight to fabricators rather than into warehouses, according to Shanghai Metals Market (SMM).

Cash copper settled at a $62 a tonne premium to the three-month contract on Monday, up from $26 a session earlier and a discount of $86 a week ago. This backwardation signals buyers cannot wait for delivery.