Copper Prices Surge on China Supply Tightness

LME Copper prices have continued their upward trend for six consecutive sessions, driven by tight physical market conditions in China. According to Ewa Manthey and Warren Patterson from ING, the metal's gains are primarily due to shrinking inventories and holiday-related restocking activity.

The analysts note that Shanghai copper cathode inventories fell by 14,700 tonnes to 43,900 tonnes, which is the lowest level since December 2023. This decline has been attributed to seasonal demand related to the upcoming Mid-Autumn Festival and National Day holidays.

Despite rising imports of copper into China, most material has bypassed storage facilities and flowed directly to fabricators, keeping spot supplies tight. ING's commentary highlights a sharp contrast between strong physical fundamentals in China and relatively weak speculative participation across base metals.

Investor positioning in copper futures has continued to retreat, with net bullish positions dropping for six consecutive weeks to 42,132 lots. This is the lowest level since late March, despite higher prices.