Copper: Chinese tightness supports prices despite weak positioning – ING

ING analysts Ewa Manthey and Warren Patterson report that LME Copper has extended gains on tight physical conditions in China, falling inventories and holiday-related restocking, even as investor positioning remains subdued. Shanghai Copper stocks have dropped to their lowest since December 2023, while net bullish Copper futures positions have declined for six consecutive weeks despite higher prices.

Physical tightness contrasts with soft investor longs

"LME copper extended gains for a sixth consecutive session on Tuesday, its longest winning streak since May, before retreating slightly Wednesday morning, as tight physical market conditions in China continued to support prices. Falling inventories, holiday-related restocking and seasonal demand ahead of the Mid-Autumn Festival and National Day holidays boosted consumption. Shanghai copper cathode inventories fell by 14,700 tonnes to 43,900 tonnes, the lowest level since December 2023."

"While imported copper arrivals have increased, most material has flowed directly to fabricators rather than warehouses, keeping spot supplies tight."

"Investor positioning across base metals remained subdued. According to the latest COTR data, net bullish copper positions fell by 3,981 lots to 42,132 lots, the lowest level since late March and marking a sixth consecutive weekly decline despite higher prices."

"Aluminium net longs dropped by 11,623 lots to 77,423 lots, driven largely by long liquidation, while zinc net longs fell by 2,787 lots to 29,946 lots, extending their decline for a fourth straight week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)