SPOTLIGHT: The warehouse queues in copper

Bottlenecks in supply of copper from LME warehouses may become more apparent as inventories rise on the back of financing deals, market participants said.

While copper financing deals are for usually for shorter terms than those that have dominated the aluminium market in recent years, some of the same issues are emerging.
Global copper stocks in LME warehouses have risen to 608,525 tonnes on Thursday April 18 – up from 320,000 tonnes at the start of this year. This has been helped in part by incentives offered by warehouses to take in material. This allows them to get guaranteed rent while the metal is sold forward into the current contango in short-term copper prices.

“What we are seeing in copper is the same sort of practices that we have seen in aluminium and zinc and are more to do with guaranteed rental income caused by bottlenecks in warehousing,” one senior source at...

Published

Shivani Singh

April 19, 2013

02:39 GMT

Singapore