Copper price falls amid rising exchange inventories

Copper for delivery in May was down 1.43% by midday, with futures touching $4.01 per pound ($8,822 a tonne) on the Comex market in New York.

The most-traded May copper contract on the Shanghai Futures Exchange advanced 1.1% to 66,290 yuan ($10,131.28) a tonne.

Copper inventories in LME warehouses have risen 67% so far in March to 123,800 tonnes, their highest since December 16, 2020. Stockpiles of the metal in ShFE warehouses were last at 188,359 tonnes, a high level unseen since September 2020.

Meanwhile, Yangshan copper premium dropped to $60 a tonne, its lowest since December 23, 2020, as inventories in bonded warehouses leaped to 382,000 tonnes, their highest since July 2019, indicating weakening demand for imported metal into China.

A report by Roskill says the industry opinion is strongly – and evenly – divided between bearish and bullish views.

“Bears will point out that this year’s price spike occurred during Lunar New Year when Chinese traders were away, indicating that the surge was largely speculatively driven, without much fundamental support, and during the quiet season for consumption in the rest of the world,” said the market researcher.

The problem is the body of evidence supporting the bulls is equally convincing.

“At the end of February, the combined exchange inventories of LME + Comex + SHFE + INE plus those in Chinese bonded warehouses stood at 710kt, sufficient to meet only 1.5 weeks of global refined consumption,” said Roskill.