LME copper tightens as prices near record

Copper trading on the London Metal Exchange has moved into pronounced backwardation, with the front-month contract trading at a premium of up to $370 per tonne over later-dated futures. This is described as the widest one-month spread since 2021 and reflects intense demand for prompt material compared with deferred delivery.

At the same time, the cash-to-three-month spread has reached about $434 per tonne, a five-year high. Such a wide spread indicates that buyers are willing to pay significantly more for immediate access to copper than for metal delivered in three months, underscoring tight near-term availability.

The LME three-month benchmark copper price has remained above $14,100 per tonne, while spot and other near-term prices are hovering around roughly $14,500 per tonne. These levels place copper close to record territory as the market responds to constrained supply and robust physical demand.

Some analysts and traders expect that, given the current degree of tightness, prices could move to new all-time highs above about $14,500 per tonne. Their expectations are tied to the combination of strong nearby demand, elevated spreads, and the ongoing decline in exchange inventories.

LME warehouse stocks have fallen for a 42nd consecutive day, reaching about 204,975 tonnes. Nearly half of the remaining copper is already earmarked for withdrawal, further limiting the amount of metal actually available to the broader market.

This sustained drawdown in inventory indicates that physical demand is outpacing the supply of deliverable copper into the LME system. The shrinking pool of freely available stocks is a key factor behind the sharp backwardation and elevated spot prices.

Market participants attribute a significant part of the LME stock decline to refined copper flows toward the United States and China. Expectations of potential U.S. tariffs are cited as one factor encouraging shipments into the U.S. market.

Supply worries, including a ban on concentrate exports from the Democratic Republic of Congo, are also cited as contributing to the tightness. These concerns are encouraging movement of refined copper to consuming regions and reducing the volume remaining within the LME warehouse network.