Rui's Market Analysis: Copper Under Pressure Amid Storage Buildup and Shifting Regional Demand

Copper prices have sustained their downward momentum, with recent trading sessions revealing a sharp 3.2% decline that reflects underlying pressures in both supply logistics and regional consumption patterns. According to market data from Jin10, this pullback is not merely a cyclical correction but signals deeper structural changes in how copper is being redistributed across global trading hubs. Guoyuan Futures analyst Rui has provided crucial insights into the mechanics behind this weakness, suggesting that the current downturn transcends simple demand erosion.

The Inventory Redistribution Story

One of the most significant developments driving copper’s decline involves a strategic shift in inventory management across major trading regions. As the U.S. market premium has evaporated in recent months, traders have begun redirecting their copper stockpiles away from American warehouses toward alternative LME (London Metal Exchange) storage facilities in other regions. This reallocation reflects a rational market response to changing arbitrage opportunities.

Rui’s analysis highlights that inventory levels reaching peak accumulations is not necessarily bearish in isolation—rather, it demonstrates how market participants are actively repositioning materials to optimize their trading strategies. The physical market’s absorption capacity appears increasingly strained, with even the opportunistic purchasing activity observed earlier in the week failing to sustain upward price momentum.

Asian Demand Deterioration and Its Ripple Effects

The weakness in Asian buyer interest compounds the inventory challenge, creating a dual headwind for copper prices. Processors and manufacturers across the region—traditionally major consumers of refined copper—have markedly reduced their procurement activities. This slowdown in end-user demand stands in sharp contrast to the period when prices were supported by steady seasonal buying.

The reduction in purchasing by key industrial consumers suggests that either demand fundamentals have weakened or buyers are strategically waiting for more favorable pricing levels. Either scenario reinforces the current bearish sentiment in the market.

Premium Compression and Tariff Anxiety

Another critical factor weighing on copper has been the compression of the Comex (U.S. futures) premium relative to LME spot prices. The Comex-LME spread, which peaked during the summer months, has contracted significantly amid growing concerns about potential import tariff implementations. This premium compression reduces profit incentives for traders looking to arbitrage between the two exchanges, further dampening trading activity and price support.

The tariff uncertainty has created a vicious cycle: hesitant buyers delay purchases pending clarity, while traders adjust their positioning defensively. Rui’s perspective suggests this dynamic will persist until either tariff clarity emerges or fundamental demand indicators improve materially.