Copper hovers below record high as non-US supply tightness remains in focus

Copper prices saw a slight decline on Wednesday as inventory levels continued to rise in the United States, approaching the possibility of a tariff on refined copper imports. The benchmark three-month copper on the London Metal Exchange fell by 0.55% to $14,628 per metric ton, marking a drop from its all-time high of $14,779 on the previous day. Meanwhile, the Shanghai Futures Exchange's most-traded copper contract increased by 0.44% to 110,740 yuan, equivalent to $16,509.38 per ton.

COMEX copper inventories, which stood at 797,275 short tons or 723,275 metric tons as of Tuesday, indicated a tightening supply situation. Some analysts anticipate copper prices to reach the $15,000 level within the week, driven by policy-driven factors. ING, a major financial services firm, mentioned that prices could experience a sharp correction if tariffs are delayed or ruled out while demand remains low.

In the United States, over 1.2 million metric tons of copper have entered the market since the Section 232 investigation into copper began in February of the previous year, leaving available material outside the country at historically low levels. Natalie Scott-Gray, a senior metals analyst at brokerage StoneX, estimated these figures. Additionally, investor positioning has become stretched, with COMEX managed-money long positions reaching near five-year highs.

In China, the world's largest copper consumer, factory-gate inflation accelerated in August due to rising energy costs, while domestic demand remained subdued. Producer prices increased by 3.8% from a year earlier, compared to 3.5% in the previous month. Consumer inflation also rose to 0.8% from 0.5%. Meanwhile, other LME metals exhibited mixed performance, with aluminum falling by 0.25%, zinc declining by 0.56%, lead slipping by 0.16%, nickel decreasing by 1.08%, and tin easing by 0.11%.