Copper price rises on ongoing supply strain in China

Copper prices climbed on Friday as inventories on the Shanghai Futures Exchange (SHFE) fell again, although the pace of withdrawals eased compared to recent weeks.

Chinese buyers continue to face challenges securing copper in a constrained market, further strained by US-China trade tensions.

SHFE copper stockpiles dropped 10% since the end of April to 80,705 metric tons, slowing from a 23.5% decline the previous week and a record 32% plunge the week before.

On the COMEX, copper for July delivery rose 3% to $4.74 per pound ($10,434 per tonne).

While most refined copper traded in China is domestically produced, higher domestic prices relative to global markets are expected to attract more overseas shipments, a trader told Bloomberg.

According to Reuters, the moderation in stockpile withdrawals, along with a slight easing in copper price backwardation, helped calm fears of a sudden price spike. Concerns of a short squeeze had emerged last month.

“Most downstream fabricators already took delivery of copper in April, when prices slumped following Trump’s reciprocal tariff announcement. That’s why the rate of decline is slower in May,” one trader said.

Backwardation, where near-term delivery prices are higher than longer-term contracts, typically reflects strong immediate demand or limited supply.

Meanwhile, domestic supply also remains tight, with the Yangshan copper premium—a key indicator of import demand—rising to $102 per ton on Thursday, the highest level since December 2023. The premium has jumped 43% since the end of March.

(With files from Reuters and Bloomberg)