Copper: Squeeze deepens on tight supply – ING

ING analysts Ewa Manthey and Warren Patterson highlight that LME Copper has pushed above $14,000/t, approaching record highs as nearby market conditions tighten. They point to surging tom-next and cash/3m spreads, reduced LME inventories due to US-bound shipments and Chinese buying, and expect near-term supply tightness to keep Copper supported if demand from electrification and infrastructure stays resilient.

Spreads and inventories signal tightness

"In base metals, copper prices pushed higher, with three-month LME copper trading above $14,000/t and approaching the record highs reached earlier this year."

"The rally continues to be driven by tightening nearby market conditions. The LME copper tom-next spread surged to a premium of $75/t yesterday, marking the widest spread since January, as a growing supply squeeze intensified ahead of potential import tariffs. Meanwhile, the cash/3m copper spread traded at a premium of $545/t yesterday, highlighting tightness in spot supplies."

"Ongoing shipments to the US ahead of a potential refined copper import tariff, combined with Chinese buying, have reduced available inventories in the LME warehouse network and tightened prompt supply. While LME stocks saw a modest increase recently, inventories remain near multi-month lows and physical market indicators continue to point to limited metal availability."

"Near-term supply tightness is likely to keep the market well supported, particularly if demand linked to electrification, data centre expansion and grid investment remains resilient."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)