Slowing global growth and uncertainty about the chance of a permanent settlement in the China v U.S. trade war might not prevent the development of a copper shortage and a higher price for the worlds most important industrial metal.
Hints of copper entering a period of short supply can be seen in the collapse of stockpiles of the metal held in the warehouses of commodity exchanges. At the London Metal Exchange the copper stockpile has dropped to a five-year low of 124,450 tons, less than half the 380,000 tons held in February.
The copper decline was a feature of a briefing delivered to investors last week by Ivan Glasenberg, chief executive of the big commodity trading and mining company, Glencore. He said inventories of metals such as copper and zinc had dropped to near record lows.
Copper Stockpile Down To 12 Days Consumption
Copper supplies could currently meet 12 days of industrial demand compared with an average of 17 days in the three years since 2015. Zinc was down to 7 days compared with a long-term average of 13 days, and the nickel stockpile had declined to 66 days compared with an average of 110 days of consumption.
Because it is used in multiple industrial and technical applications the rate of copper consumption is seen as a key forward indicator of economic activity. Under normal conditions the fall in spare copper to 12 days would have been matched by a rise in the price.