Copper prices soften as inventories rise and demand slows

Copper

Copper prices soften as inventories rise across major exchanges in March. LME three-month copper settled at $12,609/t on 18 March. Prices now cap below $13,000/t after peaking above $14,500/t in late January.

Rising LME stocks drive the clearest near-term bearish signal. On-warrant tonnage reached 290,475t on 18 March, up from about 110,550t in early January. Total LME copper stood at 334,100t, while cancelled warrants fell to 13.06%. That shift shows metal enters warehouses faster than buyers remove it.

A deeper contango confirms softer physical urgency. Cash-to-three-month spreads widened through March as nearby supply looked ample. Meanwhile, SHFE deliverable stocks hit 433,458t by 13 March, an all-time record. Falling SHFE prices reinforce weak Chinese buying at elevated levels.

Inventories rise as contango signals easier nearby supply

Copper prices soften as inventories rise, and macro worries now dominate. The US-Israel war with Iran lifted oil prices and strengthened the dollar. Therefore, traders discount construction and manufacturing demand for industrial metals. Copper acts as a growth gauge, so risk-off flows pressure prices.

Macro headwinds cool demand as the bull case shifts to later years

Supply conditions also look less supportive than in 2025. Analysts see incremental mine output returning as buyers resist high offers. As a result, sellers struggle to place cargoes without sharper discounts. However, Middle East copper consumption stays below 5% of global demand growth.

Medium-term risks still keep the structural bull case alive. A prolonged Hormuz disruption could tighten sulphur and sulphuric acid flows. About one-fifth of global copper relies on leaching and SX-EW routes. Therefore, a severe acid shortage could eventually cut African Copperbelt output. For now, visible surplus metal keeps rallies capped.

The Metalnomist Commentary

Inventory tells the truth in this phase. If stocks keep rising, prices will need demand to reappear. When contango deepens, producers and traders should prepare for tougher term negotiations.