LME copper on track for biggest monthly rise since September on nearby supply tightness

LONDON: Copper prices in London were little changed on Friday, but on course for their biggest monthly rise in eight months due to tighter nearby supply, highlighted by the premium for nearby copper contracts against those further out.

Benchmark three-month copper on the London Metal Exchange (LME) was steady at $9,570 a metric ton by 1006 GMT. The contract is up 4.8% so far in May, on track for its strongest month since September.

The price advance is supported by declining stocks in LME-registered warehouses, down 45% since mid-February to 149,875 tons, the lowest in almost a year. Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 7.2% this week.

As Washington continues an investigation into whether to impose new U.S. copper import tariffs, the premium of COMEX copper against the LME benchmark remains elevated, attracting more metal into COMEX-owned warehouses.

“The LME copper is facing a bit of a squeeze because the COMEX stocks keep going up and the LME stocks are declining,” said Dan Smith, managing director at Commodity Market Analytics.

Copper retreats on tariff uncertainty and firmer dollar

The spread between the cash LME and the three-month copper contract closed on Thursday at a premium of $51.6 a ton, highest since November 2022, indicating worries about nearby supply.

The premium, a market structure known as backwardation, also reflects uncertainty about the supply from Kamoa-Kakula copper mine in the Democratic Republic of Congo, the biggest copper producer in Africa and one of the world’s largest, Smith added.

As a group, industrial metals were under pressure as the dollar strengthened and market optimism faded following a court ruling that reinstated the broad tariffs imposed by U.S. President Donald Trump.

China’s futures markets have closed until June 3 for the Dragon Boat holiday, reducing the overall trade volumes.

As to the demand side, the focus is on the official purchasing managers’ index (PMI) in top metals consumer China, due on Saturday. China’s factory activity likely contracted for a second month in May, a Reuters poll showed.

LME aluminium fell 0.3% to $2,443.50 a ton, zinc slipped 0.4% to $2,663.50, lead lost 0.2% to $1,958, tin dropped 1.8% to $30,655, while nickel rose 0.2% to $15,395.