Copper Drops to Three-Week Low as LME Inventories Rise and US Dollar Strengthens

Copper prices retreated to a three-week low below $14,000 per metric ton on Monday, pressured by rising London Metal Exchange inventories and a strengthening US dollar. The industrial metal has dropped 6.2% from a record high reached the previous Thursday, ending a volatile stretch driven by near-term supply concerns and uncertainty over proposed US trade policies.

Three-month LME copper declined 1.6% to settle at $14,005.50 a ton by 1600 GMT, after dipping as low as $13,958, marking its weakest level since August 20. The pullback follows the metal's first weekly loss since June, reflecting shifting market dynamics as immediate supply tightness begins to abate.

The downward price movement was underscored by an influx of metal into exchange warehouses. LME copper inventories expanded by 9,600 tons, which included 4,550 tons delivered directly into storage facilities located in Italy.

This physical addition helped alleviate the acute near-term supply tightness that underpinned the metal's prior record rally. The cash LME copper contract discount to the three-month forward contract widened to $39.25 a ton from approximately $10 on Friday, signaling that immediate availability conditions are growing less constrained.

The market faced residual pressure following a sharp selloff driven by reports that the White House had not yet finalized a decision on whether to impose tariffs on refined copper imports. That regulatory uncertainty reduced the financial incentive to ship copper into the US COMEX exchange, abruptly narrowing the arbitrage window that had fueled a prolonged accumulation of stocks.

Consequently, COMEX copper inventories ticked down to 767,504 short tons, equivalent to 696,268 metric tons, bringing an end to an unprecedented streak of 58 consecutive daily increases. Analysts noted that market sentiment is pivoting away from strict supply scarcity toward broader macroeconomic forces.

Broader macroeconomic headwinds, including anticipation surrounding upcoming Federal Reserve policy decisions, also weighed heavily on investor sentiment. Neil Welsh, head of metals at Britannia Global Markets, wrote in a note cited by Reuters that copper had led the decline and was challenging recent lows while reflecting caution over tighter US monetary policy.

The broader industrial metals complex experienced widespread declines alongside copper. Aluminium decreased 0.3% to $3,242 a ton, and zinc dropped 2.1% to $3,798 to also touch a three-week low. Lead dipped 0.6% to $1,880.50, reaching its lowest point since August 3, while nickel slipped 0.7% to $16,350 for a two-month low, and tin dropped 2.4% to $52 to mark its weakest level since July 17 as markets awaited the outcome of the Federal Reserve policy meeting.