Copper prices have risen sharply, supported by tightening physical market conditions in China, according to ING Commodities Strategists Warren Patterson and Ewa Manthey [1]. The Yangshan import premium for copper surged to $100 per tonne, marking its highest level in over a year, compared to just $20 per tonne in late January. This increase is attributed to scrap shortages, which have boosted demand for refined copper and imports [1]. The tightness in the market follows Beijing’s crackdown on invoice trading, disrupting scrap flows and constraining domestic supply. Additionally, maintenance outages at several Chinese smelters have further limited production capacity [1].
Chinese copper inventories are now near the bottom of their seasonal range, while London Metal Exchange (LME) stocks are at their lowest since March, as metal is drawn into the Chinese market [1]. LME copper was trading near $13,600 per tonne during Monday’s session, representing an approximate 9% increase year-to-date [1]. The market is also finding support from expectations of potential US tariffs [1].
Tight inventories, strong import demand, and falling exchange stocks suggest that copper fundamentals remain supportive in the near term. However, ING strategists caution that concerns over global growth and the outlook for the US Federal Reserve could cap further price gains [1].
CONCLUSION
Copper prices are being driven higher by tightening supply and strong demand in China, with key indicators such as the Yangshan premium and low inventories reinforcing bullish fundamentals. However, potential headwinds from global growth concerns and US monetary policy may limit further upside in the near term.