Key facts
- Copper prices neared all-time highs, extending a six-session winning streak.
- Shanghai copper cathode stocks fell to 43,900 tons, the lowest since 2023.
- Inventories in Shanghai Futures Exchange warehouses are down 70% since early June.
- Spot cathode in Shanghai commanded a premium of 1,375 yuan a ton over SHFE futures.
- Cash copper on the LME settled at a $62 premium to the three-month contract.
- Global mined copper output could fall this year for the first time since 2017.
Copper prices neared record highs on Tuesday, extending a six-day rally as Chinese demand surged ahead of upcoming holidays and global inventories continued to shrink. Three-month copper on the London Metal Exchange settled 0.8% higher at $14,783 a metric ton, just $92 shy of its all-time high. In New York, Comex copper for December delivery reached $6.871 a pound, close to its Sept. 9 record.
The metal is on its longest winning streak in four months, largely driven by physical scarcity in China. Copper cathode stocks in Shanghai fell to 43,900 tons last week, the lowest since 2023, with inventories down 70% since early June. Imported copper is being sent directly to fabricators rather than warehouses, pushing spot premiums up significantly. Buyers are front-loading purchases before the Mid-Autumn Festival and National Day holidays, and several domestic refineries are scheduled for maintenance in October and November.
ING commodities strategist Ewa Manthey noted that falling inventories and seasonal restocking are offsetting a stronger dollar. In London, cash copper settled at a $62 premium to the three-month contract, a reversal from a discount a week prior, indicating immediate demand. Cancelled warrants, representing metal booked for withdrawal, rose to 122,150 tons, leaving less than half of the on-warrant stock available.
In contrast, U.S. Comex warehouses hold about 696,000 tons of copper, with New Orleans expected to receive another 100,000 tons by the end of October. Global mined output may decline this year for the first time since 2017 due to outages at major mines. BHP faces a Wednesday deadline for a final offer to unionized staff at the world's largest copper mine, Escondida, whose contract expires Sept. 30.
Despite the rally, some analysts are cautious. Sucden Financial's Robert Montefusco suggested prices might be inflated, warning Chinese producers could sell if prices climb further. Bloomberg Intelligence's Mike McGlone cautioned that a broader market correction could lead to a 20% to 30% drop in copper prices. The Federal Reserve's recent rate hike and upcoming trade talks between Presidents Donald Trump and Xi Jinping are also factors traders are watching.