Key Highlights

  • Copper slipped toward USD 6.60 per pound while remaining close to all-time highs.
  • LME Warehouse inventories have fallen by almost half since mid-May following a 42-day streak of declines.
  • Zijin Mining warned flooding at Kamoa-Kakula could cut its share of production by as much as 57,000 tons this year.

Copper futures slipped toward USD 6.60 per pound but stayed close to all-time highs, with supply-side risk persisting despite a recent easing of the market squeeze. The combination of a small price decline and a position near record levels describes a market where the immediate squeeze has relaxed while the structural tightness has not.

Inventories tell the tighter story

Copper inventories in warehouses tracked by the London Metal Exchange have fallen by almost half since mid-May, following a 42-day streak of declines. Two features of that figure carry weight. The magnitude, close to a 50 per cent reduction in roughly three months, is large for a benchmark inventory series. The consecutive nature of the decline, 42 sessions without a build, indicates persistent Withdrawal rather than a single large movement. Visible exchange stocks function as the market’s buffer, and a buffer at half its recent level leaves less capacity to absorb a Supply interruption.

Tariff expectations are moving metal

Traders continued to divert shipments toward the United States amid elevated premiums and expectations of new tariffs under the Trump administration, with the White House yet to make a final decision. This is a relocation of metal rather than a change in global availability, but it tightens the regions the metal leaves. Where premiums in one market pull cargo away from LME warehouses, the inventory decline and the Tariff expectation become connected rather than separate factors.

Production risk at Kamoa-Kakula

Zijin Mining warned that flooding at the Kamoa-Kakula copper complex in the Democratic Republic of Congo could reduce its share of production by as much as 57,000 tons this year. The figure is the company’s attributable share rather than the total complex loss, so the full production effect may be larger depending on ownership structure. Losses of this kind are not recoverable within the year once mine access is compromised.

Chinese smelters short of feedstock

On the Demand side, Chinese smelters have faced difficulty securing feedstock, increasing their need for imports. This is a demand signal from the middle of the chain rather than from end use. Smelters bidding for concentrate to keep capacity utilised compete for the same material affected by mine disruption, which links the Kamoa-Kakula flooding directly to the Import requirement.

Where the balance sits

Every identified Factor currently points toward tightness. Exchange inventories have halved, mine supply faces a quantified loss, tariff expectations are relocating cargo and smelters are short of feedstock. Against that, the price has slipped rather than risen, which reflects the easing of the acute squeeze rather than any change in the underlying position. That is why copper is close to record levels while trading lower on the session.

This article is general information only and does not take into account any individual objectives, financial situation or needs. It is not a recommendation to buy, sell or hold any security. All details are as stated in the company announcement or third party research referenced and are subject to change. Past performance is not a reliable indicator of future performance. Investors should consider the appropriateness of any information having regard to their own circumstances and seek independent financial advice before making any financial decision.