LONDON – It’s been a tough week for copper bulls. The price of benchmark three-month delivery copper on the London Metal Exchange (LME) has slumped almost $250 to a current $4,498 per ton, the lowest level since February.
Copper is now challenging out-of-favor lead as the worst performing base metal so far this year. This is not a story of macro headwinds. Zinc, for example, hit a fresh one-year high above $2,100 per ton on Thursday.
Rather, it is all about the surge in LME copper stocks, a total 65,550 tonnes hitting the LME warehouse system in the first four days of the week. Headline registered inventory hit a four-month high of 213,225 tonnes as of Thursday’s daily report.
At first glance this might appear to be no more than an acceleration of the recent rebalancing of global inventory away from a sated Chinese to a depleted LME market.
But the timing and scale of the inflows suggest that there was more going on than just fundamentals. This week’s events bear all the hallmarks of a battle between two of the market’s bigger players for control of the London copper spreads.
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