Copper inventories concentrate in US warehouses amid supply concerns

Copper inventories are experiencing a significant imbalance, with approximately 70 percent of the copper held in the three major futures exchanges—New York, London, and Shanghai—located in COMEX warehouses. Saxo Bank Commodity Strategist Ole Hansen notes that this concentration in the US is at an unprecedented level, potentially creating “stranded metal” if tariffs or logistics prevent movement.

Global supply is tightening due to strong demand from China’s energy transition and a lack of new mining capacity. Challenges such as declining ore grades, high energy costs, and production drops in Chile, including at BHP, are complicating supply growth. While physical tightness is evident, some price volatility in the London Metal Exchange may be driven by position squaring rather than pure scarcity.

In the precious metals market, gold shows strong potential. Despite high bond yields, central bank buying remains a powerful driver. Hansen predicts that if gold surpasses $4,500, it could test $5,000 by year-end, with new records possible next year. He suggests a 5-10 percent allocation to commodities and precious metals in investment portfolios.