LME copper stocks swell in US, Asia as cargoes divert to its warehouses

By Tom Daly

LONDON, Feb 5 (Reuters) - Available copper inventories MCUSTX-TOTAL on the London Metal Exchange have hit an 11-month high, as the bourse has become the go-to place for traders looking to store metal in the U.S. and Asia.

The amount of available - or on-warrant - copper in LME warehouses climbed to 160,625 metric tons on Wednesday, the most since late February last year, after more than 20,000 tons of deliveries into New Orleans and Baltimore over the past three weeks, as well as similar inflows in South Korea and Taiwan.

Large volumes of copper were shipped to the United States last year ahead of possible import tariffs, with higher prices on the U.S. Comex exchange drawing metal from the LME.

Recently, however, the arbitrage LMECMXCUH6 - or price spread - between the two has flipped.

Comex copper HGcv1 "is now trading at a discount to LME, so the latter naturally attracts the inflows as being the premium location," said Alastair Munro, senior base metals strategist at broker Marex.

The front-month Comex copper contract is currently trading roughly $60 a ton below the LME price LMECMXCUH6, LSEG data shows. Meanwhile, the arbitrage to ship metal from the Shanghai Futures Exchange to the LME LMESHFCUC3 has also opened.

Two industry sources report enquiries from traders with cargoes on the water looking to put their metal into U.S. LME warehouses, with delivery into Comex - their originally intended destination - no longer profitable.

"They're scrambling for space," one source said, declining to be identified as he was not authorised to speak to media.

LME copper inventories in New Orleans MCU-USMSY-TOT have risen from zero on January 15 to 16,975 tons on February 4, the highest since April 2024. And 4,625 tons has flowed into Baltimore MCU-USBWI-TOT, its biggest total since August 2022.

That means there are 21,600 tons of copper in U.S. LME warehouses, accounting for 13.4% of available LME copper.

In Asia, around 15,000 tons of copper has gone into LME warehouses in Taiwan MCU-STXTW-TOT and South Korea's Gwangyang MCU-KRKAN-TOT and Busan MCU-KRPUS-TOT this week.

Munro said this could be African-origin copper, as downstream buying in top metals consumer China pauses ahead of the Lunar New Year holiday later this month.