Copper Slides to Two-Week Low on China Profit Data While LME Backwardation Signals Tight Prompt Metal
LME copper fell as much as 1.6% to about $14,343 a tonne on softer Chinese industrial profit data, its weakest since 17 September, yet the cash-to-three-month spread has flipped into a roughly $65 a tonne backwardation and half of LME warehouse stocks are already earmarked for delivery.
Benchmark copper on the London Metal Exchange fell as much as 1.6% to around $14,343 a tonne on Monday, its lowest since 17 September, after Chinese industrial enterprise profits rose 4.2% year on year in August against an 11% increase in July. Britannia Global Markets said the data show the Chinese recovery remains narrow and concentrated in AI-linked and export sectors, which signals constrained downstream manufacturing appetite for base metals. Trading is also expected to thin ahead of China's National Day holiday from 1 to 7 October.
The physical market is sending the opposite signal. The LME cash-to-three-month spread swung from an $86 a tonne discount on 14 September to a $65 a tonne premium by 23 September, a move RBC Capital Markets read as buyers willing to pay up to secure metal sooner. Half of the 252,500 tonnes held in LME-registered warehouses has been earmarked for delivery, Comex copper set a record $6.83 a pound on 22 September, and LME three-month copper remains close to the $14,875 record set on 10 September after an 18% gain this year.
Location, not total tonnage, is the binding constraint. Comex warehouses now hold roughly 69% of the about 1 million tonnes of copper tracked by global exchanges, leaving rest-of-world buyers competing for a thin pool of deliverable units, and Comex inventories only recently began to record modest daily inflows after months of heavy accumulation. The White House has yet to decide whether to extend tariffs to refined copper imports, and that unresolved decision is what triggered the brief move of the LME spread into contango earlier this month. Supply-side risk also persists at BHP's Escondida, where contract talks with workers remain unresolved.
The rest of the complex moved lower alongside copper on 23 September: LME aluminium slipped 0.5% to $3,248 a tonne, zinc fell 0.4% to $3,894.50, lead eased 0.9% to $1,918, nickel lost 1.1% to $16,445 and tin declined 0.8% to $53,765. A firmer dollar and profit-taking after the metal tested technical resistance above $14,800 a tonne were cited as the immediate drivers, with higher oil prices adding to inflation concerns that feed back into industrial demand.