TD Securities said global copper deficits may increasingly be met by drawing down exchange warehouse stocks. It said off-exchange inventories have been used in past years to smooth supply and demand gaps.
It reported that at the end of 2023, exchange inventories were about 5% of global above-ground copper. It said this share is now roughly 33% of the above-ground stockpile.
It said the remaining 67% of above-ground copper is largely not freely available. It listed three constraints: China’s Strategic Reserve Bureau holdings, minimum working inventory needs, and US inventories that are landlocked.
It said these conditions could push more demand towards visible exchange stocks. It reported the piece was produced with help from an AI tool and reviewed by an editor.
For years, we could rely on abundant off-exchange copper inventories to absorb any supply shocks. That buffer is now gone, meaning any global deficit will pull metal directly from exchange warehouses like the LME and COMEX. This is a fundamental shift in the market’s structure.
We are already seeing this happen, as combined exchange inventories have been steadily draining since the start of the year, recently dipping below 150,000 tonnes globally. This is a critically low level, especially when we remember the supply disruptions at several major South American mines that plagued the market throughout 2025. The safety net we once had has worn thin.
A significant portion of the remaining copper stockpile is not actually available for the market, as it is held by China’s strategic reserves or is the minimum required for industrial operations. This means the pool of readily tradable copper is far smaller than headline figures suggest. The market is therefore much tighter than it appears on the surface.
This situation strongly suggests a bullish stance on copper derivatives in the weeks ahead, with a high probability of increased price volatility. Long call options or bull call spreads could be effective strategies to position for a potential price squeeze. Any unexpected increase in demand or supply hiccup will now have a much more immediate and dramatic effect on prices.
The continued push for electrification, which saw global EV sales in 2025 again exceed expectations, provides a powerful and consistent demand driver. This structural demand hitting a market with historically low *available* inventories creates a recipe for a sharp move upward. We need to be positioned for this crunch.
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