ING Commodities Strategists Warren Patterson and Ewa Manthey report Copper prices are supported by tightening physical conditions in China. Yangshan import premiums have surged on scrap shortages and smelter maintenance outages, while Chinese and LME inventories are low. LME Copper trades near $13,600/t, up about 9% year-to-date, though global growth and Federal Reserve risks may cap further upside.

Chinese demand and low stocks support

"Copper prices found support at the start of the week from tightening physical market conditions in China. Import premiums for copper - the Yangshan premium - surged to $100/t, their highest level in more than a year. This is up from just $20/t in late January, as scrap shortages boosted demand for refined metal and imports."

"The tightness follows Beijing’s crackdown on invoice trading, which has disrupted scrap flows and constrained domestic supply. Maintenance outages at several Chinese smelters have also limited production. China’s copper inventories are now near the bottom of their seasonal range, while LME stocks are at their lowest since March as metal is drawn into the Chinese market."

"Copper also continues to find support from expectations of potential US tariffs. LME copper was trading near $13,600/t during Monday’s trading session, up around 9% year-to-date."

"Tight inventories, strong import demand and falling exchange stocks suggest copper fundamentals remain supportive in the near term. Still, concerns over global growth and the Fed outlook could limit further gains."

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