Copper prices are facing significant pressure due to declining inventories and potential U.S. tariffs, leading Chinese smelters to export large quantities to cover short positions on the London Metal Exchange (LME). Reports indicate that at least 30,000 tonnes from smelters such as Jiangxi Copper and Tongling Nonferrous Metals Group are set for delivery in Asia, while nearly 10 Chinese smelters are preparing to send an additional 40,000-50,000 tonnes to LME inventories.
Warehouse stocks in China have also dropped, resulting in a tightening supply as demand softens. The premium for the cash copper contract fell to $94 a tonne on Wednesday from $280 on Monday, reflecting this market shift. Additionally, U.S. refined copper imports reached over 200,000 tonnes in April, the highest in more than a decade, ahead of a potential tariff investigation by the U.S. Commerce Department.
The LME has implemented measures to address market disturbances, yet ongoing pressure suggests a systemic issue beyond individual traders. As of Wednesday, copper for July delivery on the COMEX was trading at $4.88 per pound, compared to $9,703 per tonne on the LME.
