Copper Prices Surge Amid Tightening London Metal Exchange Inventories

Copper prices have surged at the start of the week as the London Metal Exchange (LME) inventories continued to dwindle, pushing near-term pricing back toward tightness last seen in 2021.

The LME stocks have fallen by nearly half over the past three months due to metal being pulled into the US ahead of potential refined-copper tariffs and supply worries lingering after maintenance at Indonesia's Smelting Gresik, according to Reuters.

This has caused a stress in the LME cash-to-three-month spread, which widened to a $473-a-ton backwardation. This setup pressures anyone who is short near-dated contracts, including some hedgers, as rolling those positions can mean repeatedly buying the more expensive nearby contract into the exchange's monthly settlement on Wednesday.

However, this isn't a universal demand boom, and end-user buying has cooled at these higher prices. China's Yangshan import premium also slid to $90 a ton, its lowest in a month, indicating weaker pull from China that can keep the shortage concentrated in LME deliverable supply rather than lifting the whole curve equally.