Copper prices extend advance amid shortage of metal stocks

Copper prices were on the rise Tuesday as industrial users searched for material amid declining inventories, with a buildup as well as speculative buyers.

At 1015 GMT, three-month copper on the London Metal Exchange (LME) was up 1.3% to $ 10,323 a tonne. The most traded November copper contract on the Shanghai Futures Exchange closed 0.2% higher at 75,810 yuan (US $ 11,834.77) a tonne.

LME copper has risen 15% in less than two weeks, approaching a record high of US $ 10,747.50 reached in May, supported by declining inventories and inflation concerns.

“Speculators look for raw materials as a hedge against inflation and physical buyers want to get as much material as possible”, Dijo Gianclaudio Torlizzi, de la consultora T-Commodity. “Climate change policies are a game changer, increasing demand for copper worldwide, so China is no longer the main driver”.

The LME spot copper premium over the three-month contract hit a record $ 1,103.50 a tonne on Monday, compared with just $ 55 a week earlier, indicating extremely tight short-term inventories. The premium dropped to $ 740 on Tuesday.

Metal prices were also supported by a lower dollar, which made raw materials cheaper for holders of other currencies.

Additional support came from a Peruvian community’s threat to block a mining road used by the MMG-owned Las Bambas copper deposit.

LME copper on-warrant inventories fell to 14,150 tonnes on Friday, their lowest since 1998, with one entity controlling 50-79% of LME copper warrants and short-term futures, according to the operator data.