Column: Copper stocks surge offers little relief for CME shorts

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Copper stocks registered with the world’s big three exchanges have risen above 500,000 metric tons for the first time since August 2021.

China can afford to ship some units. Shanghai Futures Exchange stocks currently stand at 322,910 tons, down only slightly from a four-year high of almost 337,000 tons earlier in June. The growing mountain of metal also explains the wide contango structure on both London and Shanghai exchanges. The LME benchmark cash-to-three-months period stretched to a contango of $150 per ton early Tuesday, almost matching last month’s record cash discount of $152.50.

ShFE stocks have conspicuously failed to draw after the lunar new year holidays, breaking a multi-year pattern of rapid early-year build followed by equally rapid depletion over the second quarter. LME warehouses in Mobile and New Orleans hold a residual 1,375 tons, all but 725 tons of it awaiting physical load out.

But it has clearly has not yet happened. It does not help that most of what is stored in the LME system does not qualify as a good-delivery brand on the CME.Chinese and Russian metal accounted for 72% of on-warrant LME stocks at the end of May. The ratio is likely to have risen further in June given the burst of arrivals at LME ports close to China.

 

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