(Bloomberg) — Copper (HG=F) rose to a three-month high on an ongoing supply squeeze and as risk sentiment improved due to optimism the US will reach trade deals with other major economies.
Spot copper contracts traded at steep premiums to those for later delivery, a market structure known as backwardation that indicates tight supply. There’s been a rapid drawdown in inventories on the London Metal Exchange and in China recently after traders moved record volumes to the US in a bid to front-run tariffs proposed by the White House.
The so-called Tom/next spread, the premium of copper due for delivery in one day to contracts expiring a day later, widened again on Tuesday after peaking at $98 a ton last week, the highest since 2021.
Copper rose 0.9% to $9,960 a ton on the LME as of 8:39 a.m. local time. It touched $9,984 earlier, the highest since March 27. Risk appetite was also aided after by a rise in stocks on hopes the US is moving closer to reaching deals with its top trading partners.
Zinc, meanwhile, fell 0.9% to $2,728 a ton as a buildup in Chinese inventories pointed to a tepid demand in the top consumer of the metal. Used mainly to galvanizing steel, zinc has dropped more than 8% this year. Mined supplies have risen at the same time as China’s ongoing property downturn and generally sluggish economy suppress demand.
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