Crowd debates in the square: LME copper inventories fall for 42 straight trading days, the longest continuous drawdown since 2014. There’s less and less copper in warehouses that can be delivered immediately, and the spot premium over deferred months has also widened. Is this a short-term short squeeze, or an early warning of a longer-term supply shortfall?
First, let’s break down the numbers. Multiple media outlets citing exchange and Bloomberg figures say LME global copper inventories have declined for 42 consecutive trading days—the longest uninterrupted drawdown since 2014. Inventories are hovering around roughly 205,000 metric tons, with one report giving a more precise figure of about 204,975 tons. Even more striking is that nearly half of the remaining inventories have already been registered for pickup or have had warrants cancelled; the “free” stock truly available to other buyers is thinner. At the same time, the near-month premium versus the deferred months at one point surged to over $300 per ton, with some reporting it at around $370, reaching the most extreme level since the squeeze in October 2021. LME March copper is also trading above $14,100 per ton—only a few hundred dollars shy of the prior record high.
【Why inventories are dropping】
(For the structural chart, see the cover and the accompanying figure in the body; please cross-check the blue line fluctuations and the Fib dashed lines on the right.)
In the public explanation, copper is being pulled away from both sides. One side is expectations of U.S. tariffs. If the tariff pathway for refined copper is implemented, the COMEX premium versus the LME could attract arbitrage traders to move metal into U.S. warehouses. The other side is China’s imports and low inventories. The inventories at the Shanghai Futures Exchange are also in an extremely low range, and import demand pulls supplies eastward. The LME becomes the balancing pool in the middle—when both sides fight for it, the exchange’s visible inventories fall day after day. This doesn’t mean global mine output collapses overnight; it’s more like deliverable inventory is being “torn apart” by regional price spreads.
Structurally, you also need to look at the premiums. When spot is expensive and the far months are relatively cheaper, it shows the market is willing to pay a premium for copper that can be obtained immediately. If shorts want to use warehouse cargo for delivery, it would be even more uncomfortable. This is the classic flavor of a short squeeze. But how long it can last depends on whether cancelled warrants keep flowing out and whether tariff expectations cool down, and whether China’s arrivals and concentrate processing fees can ease the situation.
【How to use this observation】
Don’t translate the 42-day decline into “copper prices only go up” directly. Inventory drawdown is a hard fact, but pricing has to pass through three “gates.”
First, watch free inventory. Total inventory of around 200,000 tons sounds like there’s still plenty—yet after cancellations of more than half, the truly deliverable inventory becomes the squeeze’s fuel. When free inventory stops falling, the premium often collapses first.
Second, watch the China–U.S. price spread and the tariff calendar. Once the arbitrage window closes, the pace of LME inventory drawdowns could suddenly slow down, and price volatility may reverse before fundamentals do.
Third, watch the long-term supply story. The IEA and research institutions have repeatedly warned about a supply gap in the years ahead. The power grid, data centers, and defense industries all consume copper. The long-term supply shortfall narrative can support the valuation center of gravity, but it can’t explain every single day’s trading line.
For crypto readers, copper is like a temperature gauge for AI compute power and power infrastructure expansion. When inventories get squeezed and premiums widen, it means the physical market is signaling tightness. Risk-asset sentiment may run hot together with base metals, but a copper squeeze doesn’t automatically mean Bitcoin must rise. Interest rates and the U.S. dollar will still “intercept” any shared momentum between commodities and crypto.
Do you believe more that this is a repeat of the 2021-style short squeeze, or that the 2027 shortfall narrative has already been priced in early? Send back a message: the squeeze or the shortfall.
$BTC $ETH #LME铜 #铜库存 #Commodities
Dragonfly Captain｜A finance blogger who likes analyzing data and candlestick charts.
Not investment advice. Inventories and premiums should be based on official LME data and major market terminals; media figures may lag.
First, let’s break down the numbers. Multiple media outlets citing exchange and Bloomberg figures say LME global copper inventories have declined for 42 consecutive trading days—the longest uninterrupted drawdown since 2014. Inventories are hovering around roughly 205,000 metric tons, with one report giving a more precise figure of about 204,975 tons. Even more striking is that nearly half of the remaining inventories have already been registered for pickup or have had warrants cancelled; the “free” stock truly available to other buyers is thinner. At the same time, the near-month premium versus the deferred months at one point surged to over $300 per ton, with some reporting it at around $370, reaching the most extreme level since the squeeze in October 2021. LME March copper is also trading above $14,100 per ton—only a few hundred dollars shy of the prior record high.
【Why inventories are dropping】
(For the structural chart, see the cover and the accompanying figure in the body; please cross-check the blue line fluctuations and the Fib dashed lines on the right.)
In the public explanation, copper is being pulled away from both sides. One side is expectations of U.S. tariffs. If the tariff pathway for refined copper is implemented, the COMEX premium versus the LME could attract arbitrage traders to move metal into U.S. warehouses. The other side is China’s imports and low inventories. The inventories at the Shanghai Futures Exchange are also in an extremely low range, and import demand pulls supplies eastward. The LME becomes the balancing pool in the middle—when both sides fight for it, the exchange’s visible inventories fall day after day. This doesn’t mean global mine output collapses overnight; it’s more like deliverable inventory is being “torn apart” by regional price spreads.
Structurally, you also need to look at the premiums. When spot is expensive and the far months are relatively cheaper, it shows the market is willing to pay a premium for copper that can be obtained immediately. If shorts want to use warehouse cargo for delivery, it would be even more uncomfortable. This is the classic flavor of a short squeeze. But how long it can last depends on whether cancelled warrants keep flowing out and whether tariff expectations cool down, and whether China’s arrivals and concentrate processing fees can ease the situation.
【How to use this observation】
Don’t translate the 42-day decline into “copper prices only go up” directly. Inventory drawdown is a hard fact, but pricing has to pass through three “gates.”
First, watch free inventory. Total inventory of around 200,000 tons sounds like there’s still plenty—yet after cancellations of more than half, the truly deliverable inventory becomes the squeeze’s fuel. When free inventory stops falling, the premium often collapses first.
Second, watch the China–U.S. price spread and the tariff calendar. Once the arbitrage window closes, the pace of LME inventory drawdowns could suddenly slow down, and price volatility may reverse before fundamentals do.
Third, watch the long-term supply story. The IEA and research institutions have repeatedly warned about a supply gap in the years ahead. The power grid, data centers, and defense industries all consume copper. The long-term supply shortfall narrative can support the valuation center of gravity, but it can’t explain every single day’s trading line.
For crypto readers, copper is like a temperature gauge for AI compute power and power infrastructure expansion. When inventories get squeezed and premiums widen, it means the physical market is signaling tightness. Risk-asset sentiment may run hot together with base metals, but a copper squeeze doesn’t automatically mean Bitcoin must rise. Interest rates and the U.S. dollar will still “intercept” any shared momentum between commodities and crypto.
Do you believe more that this is a repeat of the 2021-style short squeeze, or that the 2027 shortfall narrative has already been priced in early? Send back a message: the squeeze or the shortfall.
$BTC $ETH #LME铜 #铜库存 #Commodities
Dragonfly Captain｜A finance blogger who likes analyzing data and candlestick charts.
Not investment advice. Inventories and premiums should be based on official LME data and major market terminals; media figures may lag.