Copper Prices Supported by Tight Physical Market Despite Easing Inventory Constraints

Copper prices have found support in a tight physical market, despite some easing of inventory constraints. According to ING's commodities team, led by Ewa Manthey and Warren Patterson, LME inventories rose by more than 55kt over two sessions, narrowing the cash-to-three-month backwardation.

The team notes that copper remains vulnerable after months of inventory outflows, driven partly by the diversion of metal to the US ahead of expected tariffs. They expect copper prices to remain supported by tight physical supply, although further inventory inflows could ease near-term pressure and trigger additional volatility.

Data from China's National Bureau of Statistics shows refined copper production rose 1.3% year-on-year to 1.3Mt in July, supported by higher sulphuric acid by-product prices that boosted smelter margins and encouraged increased operating rates.