London Metal Exchange copper inventories have experienced a significant surge of more than 50% over a three-day period, effectively easing acute supply concerns and substantially narrowing a critical market spread that had reached extreme levels. According to Benchmark Mineral Intelligence, on-warrant copper stocks increased by 63,000 tonnes between Monday August 17 and Wednesday August 19, with gains distributed across Asia, the United States, and Europe. Total LME stocks gained 28,000 tonnes as fresh metal flowed onto the exchange and a substantial volume of previously cancelled inventory was re-warranted.
The influx demonstrates how rapidly elevated prices for immediately available metal can incentivize copper deliveries back onto the exchange. Benchmark Mineral Intelligence copper analyst Albert Mackenzie commented that the deliveries alleviate fears of extreme nearby tightness for now, noting that LME inventories will be closely monitored for signals on future price movements. The notable inventory addition highlights the market impact of US tariff uncertainty, which has drawn large volumes of copper into the country and created the perception of tighter supplies in other regions.
The deliveries were preceded by a period of steep inventory declines that had driven copper into pronounced backwardation. On-warrant stocks had fallen approximately 100,000 tonnes in July following a 75,000-tonne decrease in June. The LME cash-to-three-month backwardation had widened to nearly $550 per tonne at its peak on Monday, marking its highest level in more than five years, with more than $400 per tonne of that premium concentrated between the August and September contracts.
These exceptionally high premiums for immediate delivery provided holders of physical copper with substantial financial incentives to deliver metal into LME warehouses. Market sources indicated that a large trading company was believed to be responsible for a significant portion of the deliveries, while sources in China suggested that some metal may have originated from Chinese market participants. The increased availability of inventory rapidly eased the supply squeeze.
The cash-to-three-month spread fell sharply to approximately $176 per tonne on Wednesday, down from $436 per tonne at Monday's close. Three-month copper futures traded at $13,885 per tonne on Wednesday, a decline of nearly $300 per tonne since Monday's opening. The dramatic inventory swing underscores how US tariff uncertainty continues to reshape global copper flows, creating regional imbalances that can amplify perceptions of physical metal scarcity.
Source: mining.com