Copper prices remain supported despite slight easing in market tightness as London Metal Exchange inventories increased by over 55,000 tonnes across two trading sessions, according to ING’s commodities team led by Ewa Manthey and Warren Patterson. The inventory build has caused the cash-to-three-month backwardation to narrow, indicating reduced immediate supply pressure. However, the physical copper market continues to show underlying strength that is keeping prices elevated despite this short-term relief in warehouse stocks.
The inventory additions represent a notable shift after extended periods of tight supply conditions that had pushed the market into steep backwardation. Traders and commodity-focused institutions should monitor whether this marks a temporary reprieve or the beginning of broader supply improvements. The narrowing backwardation structure suggests near-term delivery pressure has diminished, though fundamental demand dynamics remain constructive for copper prices.
FXnCO Insight
Watch for further LME inventory movements this week, as sustained stock builds above 50kt could trigger technical selling and further backwardation normalization, presenting tactical shorting opportunities.
Source: FXStreet