- LME copper at $12,800/t on 6 March, down from $13,500/t on 27 Feb
- LME inventories jump 31,000 t w-o-w, easing near-term supply tightness
Copper prices on the London Metal Exchange (LME) declined over the past week as the market corrected after the sharp rally seen in late February. LME three-month copper was assessed at $12,800/t on 6 March, down around 5% w-o-w from $13,500/t on 27 February.
The correction followed the rapid price surge in the previous week, which pushed copper close to the $13,500/t and triggered profit booking by commodity funds and short-term traders. Market participants indicated that speculative long positions built during the rally were gradually unwound once prices approached key resistance levels, leading to a pullback in futures.
Another key factor weighing on prices was the build-up in exchange inventories. Stocks in warehouses registered with the London Metal Exchange increased to around 284,000 t as of 6 March, up from 253,000 t a week earlier, a rise of roughly 31,000 t w-o-w. The inflow of material into the exchange system eased the tightness that had supported prices in previous weeks, signalling improved short-term availability in the market.
Market participants also noted that the inventory increase coincided with metal deliveries into Asian LME warehouses, particularly in South Korea and Taiwan, which contributed to the overall stock build. The rise in warehouse stocks has reduced immediate supply concerns and encouraged traders to take a more cautious stance in the near term.
At the same time, macroeconomic pressures and a stronger US dollar added to the downside momentum in base metals. A firmer dollar typically weighs on metals priced in the currency by making them more expensive for buyers using other currencies.
Outlook:
Copper prices may remain rangebound in the near term. While rising LME inventories could limit further upside, any renewed drawdown in stocks or tightening in physical availability could quickly lend support to prices again.
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