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Informist, Tuesday, Mar. 10, 2026

 

MUMBAI – Copper prices have been under pressure in recent weeks as macro headwinds combine with signs of weaker physical demand. Before that, prices had been on an uptrend, mainly because of tight supplies. However, several indicators suggest the tight market conditions that supported copper prices in recent months may be starting to ease, Ewa Manthey, commodities strategist at ING Economics, said in a report Tuesday.

 

"...rising exchange inventories, increasing refined output in China and weaker Chinese import demand suggest the tight market that supported prices in recent months may be starting to unwind," Manthey said. Copper inventories at Shanghai Futures Exchange have recently hit a record high as physical demand weakened in China, although stocks typically build seasonally around the Lunar New Year holiday. Inventories at warehouses of London Metal Exchange, meanwhile, are approaching a 17-month high.

 

On the Multi Commodity Exchange of India, at 0937 IST, the most active March copper futures were 0.6% up at INR 1,200.70 per kg. The three-month copper futures on LME was up 0.8% at $13,044.0 per tonne.

 

"The inventory build also reflects strong inflows into LME warehouses, driven by shifting regional pricing incentives. As the COMEX-LME spread narrows, the incentive to redirect metal to the US is fading. As these pricing signals normalise, metal is increasingly being redirected back into LME warehouses and other exchange stocks," Manthey said.

With the holiday period in China now over, the direction of stocks in Shanghai will be important to watch, Manthey said. A decline in inventories would suggest Chinese demand is holding up at current prices. Inventories across the main exchanges have risen over 500,000 tonnes since the start of 2026, suggesting improving physical availability.

 

REFINED OUTPUT IN CHINA

China's smelters have continued to raise production despite tight concentrate markets and the collapse in treatment charges, supported by expanded smelting capacity and high operating rates, Manthey said. Refined copper output is expected to rise to almost 1.2 million tonnes this month, according to a poll of producers by Shanghai Metals Markets.

 

"Rising domestic production reduces China's reliance on refined imports and, when downstream demand softens, can contribute to inventory builds. Combined with weaker import demand signals, higher smelter output points to additional supply filtering into the global market," Manthey added.

 

PRICE SPREADS

"The LME cash-to-3M spread – a key gauge of physical market conditions – has moved closer to neutral levels after sharp spikes in backwardation earlier in the year, suggesting pressure in the nearby market has moderated as short-term availability improves," she said. If the spread moves deeper into contango, it would signal increasingly comfortable supply conditions in the prompt copper market.

 

Strong US premium last year created an arbitrage opportunity that encouraged shipments of copper into the US, tightening availability in other regions. But with the COMEX-LME spread narrowing, the pull of the US market has weakened, allowing more metal to be available elsewhere. "This shift in trade flows could contribute to the recent build in exchange inventories and ease supply tightness outside the US," Manthey said.

 

While US President Donald Trump could still move ahead with tariffs, the collapse in the price arbitrage suggests markets are betting he will not, following the decision to exempt critical minerals in January. "Taken together, these indicators suggest the copper market is gradually shifting away from the tight conditions seen over recent months towards a more balanced supply environment," she said.

 

While near-term headwinds are rising, structural demand linked to electrification and the energy transition continues to underpin copper's longer-term outlook, she added.  End

 

US$1 = INR 92.14

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Ashutosh Pati

Edited by Deepshikha Bhardwaj

 

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