Copper price dips as LME stockpiles rise to highest in over six years

Copper fell, with inventories tracked by the London Metal Exchange surging to their highest level in more than six years as demand for physical metal continues to come under pressure from higher prices.

Futures for the bellwether industrial metal were down 0.9% midmorning in London, near $12,740 a ton. LME stockpiles jumped by nearly 19,000 tons to 330,375 tons, the highest level since September 2019.

A rapid buildup of exchange stockpiles since the start of the year reflects a growing bearish mood in the physical market for copper. Sellers have struggled to offload cargoes as demand weakens in China, while a rush to ship metal to the US ahead of potential tariffs has waned. Prices that reached a record above $14,500 at the end of January, and remain 30% up from a year ago, are giving many buyers pause.

Meanwhile, aluminum recovered after a two-day slide, as uncertainty over the duration of the Iran war continues to fuel worries about further potential output cuts at major plants across the region.

The near-total closure of the Strait of Hormuz is stopping smelters from shipping out metal and bringing in raw materials. Several firms have already reduced output, and the risk of more halts will grow if the war continues, analysts warned.

Producers in the region could cut as much as another half a million tons of annualized output if the strait remains blocked for another one to two weeks, Chinese researcher Mysteel wrote in a note.

“The current aluminum price still significantly underestimates the impact of supply reductions and cost increases on the aluminum industry,” Mysteel said. Previous price expectations based on a quick resolution of the conflict aren’t valid, it said.

Elsewhere, on Monday, a technical failure led to a halt of electronic trading in all contracts on the London Metal Exchange for more than two hours, with dealers unable to place orders in markets ranging from aluminum to zinc.

Copper futures on the LME traded at $12,750.50 a ton as of 10:52 a.m local time. Other metals were mixed, with aluminum up 0.8% and nickel down 0.4%.

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