Key Takeaways
- Copper prices increased by 0.3% to $14,373 a metric ton.
- Global inventories, particularly in Shanghai, fell by 13%.
- Market tightness is expected to continue supporting copper prices.
Copper prices edged higher on Friday, rising by 0.3% to $14,373 a metric ton by 0900 GMT. This move brought the metal closer to its all-time peak of $14,527.50.
The price gains reflect a 10th consecutive weekly rise, with the metal set to end the week with a 0.5% gain. This upward trend began in the week starting June 29, driven by the reduction in inventories outside the U.S., particularly in the Shanghai Futures Exchange.
Shanghai copper inventories dropped by 13% from the previous week to 63,000 tons, the lowest level since January 2024. Additionally, LME copper stocks decreased by 475 tons, with orders to withdraw another 1,550 tons pending.
The reduction in inventories is partly due to the anticipated import tariffs, which have led to a surge in U.S. copper imports in July, reaching their highest level on record. This has tightened the market outside the U.S., driving up prices.
BMI, a unit of Fitch Solutions, noted that tariff uncertainty is likely to continue supporting copper prices, although already elevated prices may limit near-term gains. The dollar's decline overnight, driven by dovish comments from Federal Reserve Governor Christopher Waller, also contributed to the price increase.
Aluminium prices, however, slipped 0.5% to $3,295, but were still on track to end the week 1.6% higher. The cash-to-three-month aluminium spread has flipped into a slight backwardation, indicating tightening availability.
Zinc added 0.5% to $3,932.50, with the three-month spread still in steep backwardation at $140 a ton. Lead prices were up 0.5% at $1,912.50 after orders to withdraw 8,450 tons of stock, while nickel nudged up 0.2% to $16,825 and tin shed 0.4% to $54,700.
Analysts remain neutral to constructive on copper's near-term prospects, citing low visible inventories and a still-tight physical market. However, the balance is expected to become more challenging over the next six to 12 months as ex-China supply growth accelerates.
