Copper edged 0.6% higher last week to $14,160/t, but the main story was the significant tightening in the physical market. Falling LME inventories, US tariff-related stockpiling and mounting mine disruptions pushed the cash-to-3-month spread to a $416/t backwardation, the widest since 2021 and enough to prompt emergency measures from the LME. The broader backdrop remains supportive, with AI infrastructure demand, constrained supply and fading Fed hike expectations providing tailwinds. The main offset is China, where softer import premiums suggest high prices are beginning to curb demand.
NB Backwardation occurs when the spot price trades above futures prices, typically signalling tight near-term supply or strong immediate demand – the opposite is Contango.
- We remain bullish towards copper, still believing a test of at least US$15,000 is likely before Christmas.
MM remains bullish towards copper ~US$14,000/MT
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