Copper Inventories on London Metal Exchange Halve Since Mid-May

Registered copper inventories on the London Metal Exchange (LME) have dropped by nearly half since last mid-May, in a development reflecting mounting pressure on the supply side in global copper markets.

This sharp decline in inventories indicates that industrial consumers are withdrawing copper from exchange warehouses at a faster pace than it is being added, narrowing the strategic inventory buffer available to the market.

Markets are closely monitoring this development, as falling reported exchange inventories increase the likelihood of a higher spot premium for copper, boosting the chances of price increases in the near term.

This inventory decline coincided with supply disruption events in Africa, pointing to dual pressures combining increased industrial demand and shrinking available supply, making continued upward pressure on prices likely in the near term.

What Do These Terms Mean?

London Metal Exchange (LME): The world's largest industrial metals exchange, headquartered in London, serves as the main benchmark for copper, aluminum, and zinc prices, and its futures contracts are used by producers and consumers worldwide.

Reported Inventories: The quantities of metals deposited in exchange-approved warehouses and officially listed in its records, reflecting the actual state of available supply in the markets.

Backwardation: A condition where the futures contract price of a metal is lower than its spot price, signifying a shortage of spot supply in the market and high immediate demand.