Column: Copper is pricing scarcity at a time of plenty

Don’t panic. The world hasn’t run out of copper, despite the many warnings of imminent shortfall that have accompanied its rally to all-time highs.

Indeed, the amount of copper held by the world’s big three metal exchanges is above the 1.1 million metric ton mark for the first time since early 2003.

While the tariff trade ensured CME warehouses in the United States accounted for much of the inventory increase last year, both London Metal Exchange and the Shanghai Futures Exchange warehouses are also experiencing accelerated inflows.

Global exchange inventory has surged by 300,000 tons since the start of January, indicating that copper’s super-charged price rally has curbed manufacturing demand.

The gap between speculators’ great expectations and current reality yawns ever wider.

US tariff trade stalls

CME copper stocks registered a net decline on Thursday for the first time since late October in a sign that last year’s relentless build has lost momentum.

The threat of US import tariffs on refined copper, deferred until June, led the CME duty-paid copper price to trade at a wide premium over the LME’s international price at times in 2025.

Traders shipped massive amounts of physical copper to the United States to lock in the easy profits from what was an unprecedented arbitrage opportunity.

US imports of refined copper reached 1.45 million tons in the first eleven months of 2025, a year-on-year increase of over 600,000 tons.

Much of that metal found its way to CME warehouses, lifting exchange stocks from 85,000 tons at the start of 2025 to 536,000 tons today.

The momentum is stalling, however.

The CME premium has evaporated as the market re-assesses the likelihood of US import tariffs. The rationale of US import dependency looks less convincing now the country has so much inventory.

US arrivals continue, but are being redirected to LME warehouses in Baltimore and New Orleans, where registered stocks have risen from zero to 4,950 and 21,075 tons respectively over the last month.

Another 6,450 and 20,665 tons of copper sit in off-warrant LME storage at the two ports.

Shanghai (pre)seasonal surge

The gravitational pull of the US premium last year sucked in 200,000 tons of copper from China’s bonded warehouse zones but no-one seems to have missed it.

Shanghai Futures Exchange stocks have risen by 127,000 tons to 272,475 tons since the start of January. The Yangshan premium , an indicator of import demand assessed by local data provider Shanghai Metal Market, touched an 18-month low of $22 per ton last month.

Sure, rising inventory and weak import appetite are the norm around China’s lunar new year holiday period.

But the Year of the Horse only starts next week and Shanghai exchange stocks are already higher than last year’s seasonal peak.

Moreover, China seems to have enough surplus metal to help replenish LME stocks.

Spreads signal surplus

Chinese brands of copper accounted for 70% of LME-warranted stocks at the end of January and arrivals are taking place daily at LME warehouses in South Korea and Taiwan.

LME-registered stocks are up by 40% so far this year at 203,875 tons with off-warrant tonnage up by 30% at 90,720 tons.

Time-spreads have loosened accordingly. The benchmark LME cash-to-three-months period was in backwardation as recently as November but is now in a comfortable contango of over $100 per ton.

Forward curves on both the CME and Shanghai copper contracts are also in contango, signaling ample availability.

Price signals…?

Rising stocks and loosening spread structures don’t sit well with an outright price that is within touching distance of last month’s record nominal high of $13,618 per ton.

Doctor Copper has caught a dose of the metals fever that first gripped gold, then moved to silver before spreading to base metals.

Chinese and Western investors alike have been buying up copper both as a bet on the metal’s bright energy transition demand narrative and as a hedge in the broader dollar debasement meme.

But the argument for ever higher prices rests on an assumption that at some stage there will not be enough copper to meet global demand.

That time has yet to come. And every daily rise in global inventory pushes it a little further into the future.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Barbara Lewis)