Top trader readies large outtake of copper from LME inventories

Trafigura, one of the world’s largest commodity traders, is planning to remove significant batches of copper from warehouses registered with the London Metal Exchange (LME), Reuters reported last week citing two sources.

“In an environment of constrained supply, reflected by high copper benchmarks in Europe, we are ensuring we can continue to supply our customers with the metals they need,” Trafigura told the agency, neither confirming nor denying that it had such plans.

Why it matters

The large withdrawal of metal and increasing shift from futures to cash contracts is heightening concerns over possible shortages of the physical metal on the LME market.

Claims of preparations for a large outtake are supported by the rise in the share of metal earmarked for delivery in LME-registered warehouses to 30,825 tonnes – or 38% of 81,600 tonnes of total copper stocks – on 19 January, up from just 12% on 3 January.

Benchmark copper prices on the LME were between USD 9,300 and USD 9,400 per tonne early this week, not far off the 24-week high of USD 9,547 reached on 18 January.