Copper: Tight inventories sustain price support – ING

ING analysts Warren Patterson and Ewa Manthey assert that copper remains anchored by tight LME inventories and robust US-bound shipments. They point to a significant surge in revoked warrants, revived warehouse withdrawals, and high US premiums. Notably, record-high prices have sparked some demand concerns in China, even as copper has risen nearly 15% year-to-date.

Copper experienced an uptick after fresh withdrawals from LME warehouses reignited worries about constrained exchange inventories. LME-cancelled warrants rose by 51.4kt, the biggest daily increase since May. Recent shipments into LME warehouses have somewhat alleviated some of the tightness, but the latest withdrawal indicates that any inventory recovery could be fleeting.

Inventory shifts continue to be a primary focus, with exchange stocks remaining comparatively low. Copper continues to be bolstered by substantial metal flows into the US. For now, tight inventories and ongoing US-bound flows are the primary drivers, leaving the market exposed to additional episodes of tightness and volatility.