Copper prices on the LME fell about 1% today, giving back part of Monday’s rally. The rise on Monday followed President Trump’s temporary pause in planned US strikes on Iran’s energy infrastructure.
Prices then slipped after Tehran denied any ongoing negotiations. Copper is down about 10% this month.
The monthly fall has led to renewed Chinese buying. Mysteel data shows inventories fell by 78,700 tonnes last week to 486,200 tonnes, the largest weekly draw this year.
The report says this points to stronger physical demand after the recent price correction. The article was produced with the help of an AI tool and reviewed by an editor.
We recall from 2025 how geopolitical noise, like the temporary pause in US-Iran strike plans, created short-term volatility in copper. A subsequent 10% price drop was met by a surge in Chinese buying, highlighted by the largest inventory withdrawal of that year. That period showed us how physical demand provides a floor for prices during corrections.
Today’s market is significantly tighter, with copper prices recently trading above $9,000 per metric ton amid ongoing supply disruptions. LME warehouse inventories are hovering near just 112,000 tonnes, drastically lower than the nearly 500,000-tonne buffer we saw before the big draw in 2025. This leaves the market far more exposed to any demand-side surprises.
Chinese demand is also showing signs of recovery, as the Caixin manufacturing PMI recently rose to 50.9, signaling an expansion in activity. This is not the opportunistic bargain-hunting of 2025, but a fundamental return of demand into a market with very thin stockpiles. This combination points towards a market highly sensitive to any further positive economic data.
Given the low inventory cushion, derivative traders should consider positioning for increased price volatility. Any unexpected surge in buying or further supply issues could cause a sharp upward move. Buying call options could offer a defined-risk way to capture potential upside in the coming weeks.
The structure of the futures market should also be monitored closely for signs of extreme tightness. A move deeper into backwardation, where spot prices are higher than future prices, seems likely. This would present opportunities for calendar spread trades that profit from the front end of the curve strengthening relative to deferred months.
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