Copper: Tight supply supports breakout above $14,000 – ING

ING’s Warren Patterson and Ewa Manthey highlight that Copper has surged above $14,000 per tonne on the LME, driven by tightening physical conditions and strong prompt demand. Falling LME inventories, deeper backwardation, improved speculative positioning and ongoing supply challenges underpin a constructive view, with limited buffer stocks and continued shipments to China keeping availability tight outside the US.

Tight inventories and strong demand backdrop

"Copper surged above $14,000/t on the LME, its highest level in two months, as tightening physical market conditions continued to support prices. Large volumes of copper have been drawn into the US amid ongoing uncertainty over potential import tariffs, reducing availability elsewhere and leaving inventories outside the US increasingly tight."

"The squeeze is becoming more visible in exchange data. LME inventories have fallen to multi-month lows, while the market has moved deeper into backwardation, signalling strong demand for prompt supply. Tight availability has also been supported by ongoing shipments into China and limited buffer stocks across the market."

"Meanwhile, speculative sentiment improved in copper and aluminium. Copper net longs rose by 6,863 lots to 54,946 lots, while aluminium net longs increased by 1,170 lots to 60,434 lots. Zinc net longs fell by 3,739 lots to 35,997 lots, ending a four-week run of gains."

"We remain constructive on copper. Low inventories, ongoing supply challenges and strong long-term demand drivers should keep the market supported."

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