METALS-Tight availability pushes copper to six-month high
XLB•Outflows and supply concerns tighten the market
Material outflows to the U.S. ahead of potential tariffs on imports of refined metal as well as wider supply concerns have buoyed copper prices. Total stocks in LME-registered warehouses MCUSTX-TOTAL have fallen by nearly half in the last three months, while prices have risen 6.2%.
Inventory tightness has helped push a key LME copper spread to its widest since 2021. The LME cash-to-three month spread CMCU0-3 widened to a backwardation of $490.99 a ton, as traders with bearish positions scrambled to secure metal ahead of the exchange's monthly contract settlement day on Wednesday.
"Shorts are having to buy nearby contracts to close or roll positions amid tight availability of deliverable metal," said Craig Lang, principal analyst at commodity research firm CRU.
Chinese demand softens as industrial metals also gain
The rally in copper contracts was capped by reduced consumer buying. The Yangshan copper premium SMM-CUYP-CN, a barometer for import demand in the world's biggest consumer of the red metal, China, fell to $90 a ton on Friday -- its lowest in a month.
The fall "primarily reflects deteriorating import economics, as well as softer near-term physical demand from Chinese buyers as they take a hand-to-mouth approach due to higher copper prices," Lang said.
A cheaper dollar supported other industrial metals. On the LME, aluminium CMAL3 added 0.28%, zinc CMZN3 added 0.32%, lead CMPB3 gained 0.61%, nickel CMNI3 gained 0.62% and tin added 0.37%.
