Copper prices on the London Metal Exchange (LME) experienced a sharp decline, falling below $14,000 per tonne, marking the steepest drop since July 23. This downturn was triggered by a significant increase in on-warrant copper inventories, which rose by 20,025 tonnes—the largest daily gain since April 7—and extended their upward trend for a sixth consecutive session to reach 123,100 tonnes [1]. The influx of fresh deliveries into LME warehouses has alleviated a prolonged supply squeeze that had previously driven prices higher. The supply tightness had been exacerbated by strong shipments to the US, motivated by tariff-related arbitrage opportunities [1].
As a result of the improved supply situation, the LME cash/3M copper spread narrowed to $248 per tonne, and the tom-next spread also retreated after recently hitting levels not seen since the 2021 copper squeeze [1]. Market sentiment has shifted as speculative net long copper positions were trimmed by 6,340 lots to 53,914 lots, ending a two-week streak of increases despite the earlier rise in copper prices [1].
The moderation in bullish sentiment and the easing of supply constraints suggest that copper prices may stabilize or face further downward pressure in the coming days and weeks, according to ING’s commodities team [1].
CONCLUSION
A surge in LME copper inventories has eased the recent supply squeeze, leading to a sharp price decline and a reduction in speculative long positions. Market sentiment has turned more cautious, with spreads narrowing and the outlook for copper prices appearing less bullish in the near term.