Recently, the international copper market has once again become the focus. As inventory of registered warehouses on the London Metal Exchange (LME) continues to decline, market concerns about short-term copper supply continue to intensify, resulting in a significant premium on spot contracts. This rare market structure change may indicate that the global copper supply and demand pattern is undergoing a subtle and profound change.

1. The price of LME spot copper has a sharp premium, hitting a two-and-a-half-year high

According to the latest market quotation, the LME spot copper contract has a premium of US$75 per ton compared with the benchmark three-month copper futures (CMCU0-3), and at the close of last Thursday, it jumped to US$93 per ton, setting a record high since the end of 2021. In contrast, in early April this year alone, the price spread was still subsidy of $63, and there was a strong reversal in just one month.

Industry insiders pointed out that this drastic change from discount to premium directly reflects the tense atmosphere in the copper spot market. "The emergence of spot contract premiums indicates a certain degree of shortage risk, which usually occurs when market inventory is tight," said Dan Smith, managing director of Commodity Research Institute. src="https://p3-sign.toutiaoimg.com/tos-cn-i-axegupay5k/dce8ae6dfc6947e99b98f2ab9740cbc5~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1750056092&x-signature=flNeiaC8bBSAV7jpdjcYT0rvonE%3D" img_width="800" img_height="533" image_type="1" mime_type="image/jpeg" web_uri="tos-cn-i-6w9my0ksvp/e6bdc22dd13b46dab690ac6eb0a9ec32" class="syl-page-img" style="height: auto;" data-src="https://p3-sign.toutiaoimg.com/tos-cn-i-axegupay5k/dce8ae6dfc6947e99b98f2ab9740cbc5~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1750056092&x-signature=flNeiaC8bBSAV7jpdjcYT0rvonE%3D">

2. Inventory continues to decrease, short-term supply risks are highlighted

The total copper inventory in LME registered warehouses has dropped by half since mid-February, and currently only 132,400 tons remain, the lowest level in the past year. The copper inventory available for delivery fell to 54,600 tons, the lowest since July last year.

What is even more worrying about the market is that recent broker reports show that a large number of warehouse receipts have been cancelled (i.e., ready to pick up goods), indicating that available copper resources in the spot market are flowing out quickly, especially before the contract is about to expire.

3. COMEX price attracts transfer, and geopolitical and policy risks are superimposed

At the same time, the copper price in the US COMEX market is higher than the LME price, attracting a large amount of copper metals to flow from Europe to the US market, further compressing the available delivery resources of LME.

In addition, the outside world is concerned about whether the U.S. government will impose tariffs on copper imports. If the policy is implemented, it may further affect the global copper flow path and aggravate regional shortages.

4. Market concentration has increased, and signs of forced positions have attracted attention.

According to data disclosed by LME, as of June 4, a market participant held more than 90% of spot copper contract positions. Although it has not been clearly defined as a "forced position" behavior, this highly centralized position structure has indeed aroused market vigilance.

Industry experts pointed out that if the participant chooses to postpone delivery or restrict delivery, it will further push up the premium and may even cause severe fluctuations before the contract expiration date.

5. Summary: The global copper market is moving towards a "tight balance", and we need to pay attention to the three major risks

Overall, the soaring premium of LME copper spot contracts is the result of the superposition of multiple factors, which reflects core issues such as tight inventory, rising geopolitical risks, and increasing concentration of market participants. In the next few weeks, the trend of the global copper market will still be affected by the following three factors:

Whether the United States implements copper tariff policyWhether the United States implements copper tariff policyWhether the United States implements copper tariff policy;Is there any new inventory in the LME warehouse to supplement the spot market gap?.

In the context of global green energy transformation and growing infrastructure investment, copper's status as a "new economic metal" is becoming increasingly prominent. The current market changes have also sounded the alarm for global copper supply chain and industrial chain managers.