A significant squeeze in the copper market has partially eased due to substantial inflows of readily available metal into the London Metal Exchange (LME). According to data released on Wednesday, inventories on warrant in the LME's global warehouse network increased by over 35,000 tons, marking the largest single-day gain since 2024. This follows an increase of more than 20,000 tons in the previous session, with Trafigura Group contributing a significant share.
Prior to this recent recovery, LME copper stockpiles had shrunk by approximately 75% from their mid-April peak. This rapid increase in available metal has helped to mitigate the immediate pressure on the market, although underlying physical tightness is still present. The influx of copper has allowed for some easing in the previously strained short-term supply dynamics.
The large deliveries by traders, including Trafigura, come amidst a period where the "tom/next" spread (the cost of rolling a position forward one day) had spiked to levels last seen during the 2021 squeeze, reaching as high as $110 before closing at a $79 premium. The cash-to-three-month backwardation also collapsed from as much as $545 on Monday to $248 a ton, indicating a relaxation of prompt supply concerns. This move by traders capitalizes on the lucrative opportunity presented by the steep premium for immediate supplies.
