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Copper is experiencing an historic backwardation, with spot prices trading at a premium of $345 per tonne to three-month futures as of Monday, the highest level since 2021. This backwardation signals tightening supply, driven by a drastic 80% decline in readily available inventories on the London Metal Exchange (LME), now equating to less than a day of global usage.
In April, US refined copper imports surged past 200,000 tonnes, the highest in over a decade, amid speculation of potential tariffs following a Trump administration investigation initiated in February. The price pressure is further exacerbated by Chinese smelters offering to pay miners for processing due to insufficient raw material supply.
The LME has taken measures to curb backwardation driven by large trader positions, but market data indicates a broader systemic squeeze, with key short-term spreads moving independently of major traders. As of Monday, copper for July delivery on the COMEX slipped 0.2% to $4.83 per pound ($10,626 per tonne).
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