Copper prices have almost fully recovered losses linked to the Iran war, even as funds have sold and broader risk assets have weakened. TD Securities reported a shortage of unencumbered copper inventories and said hoarding has been more persistent in this episode.
The firm said demand for commodities has continued to firm after the Iran war. It compared current hoarding patterns with behaviour seen during other geopolitical conflicts, including Russia-Ukraine.
TD Securities said available copper inventories are “unprecedentedly scarce” due to three factors. These are metal held out of consumption in China’s SRB (State Reserves Bureau), landlocked metal in the US, and the need to keep minimum working inventories.
The firm expects Commodity Trading Advisors (CTAs) to avoid selling copper over the coming week if prices remain elevated. It said that if prices keep rising, buying programmes could reach up to +13% of maximum size.
It said copper markets are moving towards a copper crunch. The article notes it was produced using an AI tool and edited by a human editor.
Copper prices have bounced back strongly, even as other risk assets have been sold off. We’re seeing prices hover near $10,500 per tonne, effectively erasing the losses from the conflict in Iran last year. This resilience suggests a powerful underlying trend that traders should not ignore.
We believe this strength is rooted in hoarding behavior, much like what we observed after the Russia-Ukraine conflict back in 2022. Recent data supports this, with China’s refined copper imports for Q1 2026 showing a 5% increase year-over-year, indicating strategic stockpiling rather than just immediate consumption. This pattern points to a market bracing for prolonged tightness and a potential supply crunch.
The physical market is showing signs of extreme scarcity, with visible inventories at dangerously low levels. As of this week, combined LME and SHFE stockpiles are sitting below 70,000 tonnes, a figure that rivals the multi-year lows we saw in late 2022. This leaves very little buffer for any unexpected supply disruptions and makes the market sensitive to any new buying.
For derivative traders, this setup suggests that being short copper is a high-risk position right now. Algorithmic funds, or CTAs, are unlikely to initiate sell programs and are positioned to start buying significantly if prices push higher from here. This creates a bullish skew, where call options could be attractive to capture potential upside breakouts in the coming weeks.
