Via scmp.com
London Metal Exchange sees largest weekly copper inflow since 2020, breaking 42-day drought
A massive influx of over 35,000 tonnes into LME warehouses is cooling one of the most intense copper squeezes in recent memory, but structural supply concerns linger.
After 42 consecutive days of declining stockpiles, the longest such streak since 2014, copper inventories at the London Metal Exchange just snapped back in dramatic fashion. Weekly inflows exceeded 35,000 tonnes, the largest weekly buildup the exchange has seen in years, with a single day on August 18 accounting for somewhere between 17,000 and 20,000 tonnes alone.
That daily figure represents the biggest one-day increase since April.
How the squeeze built, and how it broke
By August 14, LME copper stocks had fallen to 204,975 tonnes after those 42 straight sessions of declines. Nearly half of the available metal sitting in warehouses was already earmarked for withdrawal, meaning the real usable supply was even thinner than the headline number suggested.
That scarcity pushed copper prices to record territory near $14,500 per tonne earlier in August. The cash-to-three-month premium had ballooned past $500 per tonne.
Trafigura Group, one of the world’s largest commodity trading houses, played a central role in breaking the logjam. The firm’s deliveries helped drive a 75% rise in available stocks over the course of a single week.
The result was immediate. That cash-to-three-month premium compressed from over $500 per tonne down to a range of $170 to $248.
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Why copper was so tight in the first place
Electrification is the big one. Every electric vehicle uses roughly three to four times more copper than a conventional car. Grid upgrades needed to support EV charging, renewable energy installations, and the explosive growth of data centers are all copper-intensive projects competing for the same finite supply.
On the production side, Chile, the world’s largest copper-producing nation, continues to face operational challenges that have constrained output. Aging mines, water scarcity, and regulatory uncertainty have kept Chilean production below its potential for several years running.
US trade tariffs add another wrinkle. Tariff policies have the potential to redirect global metal flows, effectively creating regional premiums and shortages even when aggregate global supply might otherwise be adequate.
Temporary relief or turning point
A 35,000-tonne inflow, while large by weekly standards, represents roughly one day’s worth of global copper consumption. The fact that it took a major trading house actively choosing to deliver metal to break the streak suggests that the market wasn’t self-correcting on its own.
Copper prices near $14,500 per tonne remain at historically elevated levels. For context, copper traded below $8,000 per tonne as recently as mid-2023.