Copper Faces Inventory Shifts and Technical Setbacks as Global Trade Flows Reshape Market

Copper prices slipped in the last 24 hours, reflecting a market caught between shifting inventories and technical weakness.

Official data shows London Metal Exchange (LME) cash copper settled at $9,655 per ton on June 2, while US futures hovered near $4.77 per pound.

The attached four-hour chart confirms this trend, with copper contracts dropping from highs near $4.95 per pound and testing support around $4.77.

Price action rejected the upper Bollinger Band and moved through both the 50-period and 200-period moving averages, signaling a loss of upward momentum.

The 200-period moving average at $4.74 now acts as immediate support. The Relative Strength Index (RSI) has slipped below 50, indicating fading bullish momentum.

The Moving Average Convergence Divergence (MACD) histogram has turned negative, confirming a loss of upward drive.

Volume increased on the decline, suggesting strong participation in the sell-off. These technical signals, widely used by traders, point to a cautious short-term outlook for copper.

Copper Faces Inventory Shifts and Technical Setbacks as Global Trade Flows Reshape Market

Inventory flows have played a central role in recent price action. LME copper stocks fell to 148,450 tons, their lowest since early April, while US inventories reached their highest since 2018.

This divergence reflects metal flowing from London to the United States as buyers seek to shield themselves from potential tariffs.

Chinese inventories remain at decade lows, with Shanghai Futures Exchange (SHFE) stocks near 116,800 tons and weekly drawdowns exceeding 50,000 tons.

The Shanghai market shows its steepest backwardation in nearly two years, with prompt-month contracts commanding a $150 per ton premium over three-month futures.

This signals significant tightness in the physical market, even as North China spot copper traded at a discount, reflecting some softening in immediate demand.

Broader macroeconomic factors have also shaped market sentiment. The People’s Bank of China cut key lending and liquidity rates, supporting factory activity and stabilizing demand.

However, robust ore output from South America has increased the risk of a wider surplus this year.

US copper inventories surged as buyers hedged against possible tariffs, crushing the premium that had developed in anticipation of import restrictions.

The cash premium in the US dropped sharply, narrowing the spread between US and global prices.

Fundamentally, the market faces a delicate balance. Global copper mine output is projected to reach 23.2 million tonnes in 2025, a modest 3% increase from 2024.

Demand, driven by electrification and infrastructure, continues to rise, with Asia—especially China—accounting for nearly 74% of global consumption.

Despite this, some sectors like construction and electric vehicles have shown signs of slowing, especially in mature markets.

ETF flows remain subdued, and the Sprott Copper Miners ETF saw only a minor uptick of 0.28% in net asset value on June 3.

With technical indicators flashing caution and inventory patterns diverging across regions, copper’s next move will likely hinge on further trade developments and supply chain adjustments.

The market remains volatile, with traders watching both macro policy and technical levels for direction.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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