The copper market, which had been experiencing a historic squeeze, saw some relief following substantial inflows of readily available metal into the London Metal Exchange (LME). Data released on Wednesday indicated that inventories on warrant in the LME’s global network of warehouses surged by over 35,000 tons, marking the largest increase since 2024. This follows an earlier increase of more than 20,000 tons in the previous session, a significant portion of which was contributed by Trafigura Group. Prior to these recent recoveries, the stockpiles had plummeted by approximately 75% from their mid-April peak.
This influx of metal helped to alleviate immediate concerns regarding supply tightness. The cash-to-three-month backwardation, which had reached as high as $545 per ton on Monday (the widest since 2021), collapsed to $248 per ton. This suggests that the premium for immediate delivery copper has significantly decreased, reducing the pressure on short-position holders. Other traders, in addition to Trafigura, are also expected to deliver more metal to the LME in the coming days.
The underlying factors contributing to the tightness, however, remain. For instance, the U.S. Commerce Department has not yet ruled on refined copper duties, leaving a proposed 15% tariff for January 2027 (rising to 30% in 2028) unresolved. This uncertainty has continued to divert large volumes of copper to the U.S., with about 56,000 tons arriving in the first two weeks of August, following a record 223,000-ton inflow in July. Additionally, structural issues such as Chile cutting its output guidance twice this year, the Freeport’s Gresik smelter being offline, and Congo’s ban on concentrate exports persist, limiting global supply. Three-month futures settled 1.2% lower at $13,986.50 a ton, though copper is still up about 13% this year.
