Copper Inventories Rising

Tom McClellan

Research

1 Pages

McClellan Financial explains how rising copper inventories can provide an early signal about future copper prices and broader economic conditions. The paper argues that producer behavior may reveal more than price movements alone, noting LME copper inventories climbed 190% while copper prices fell just 18%, suggesting producers viewed prevailing prices as unattractive.

Key Takeaways

Inventory Surge: LME copper inventories increased 190% from the October 2012 low even as copper prices declined just 18%, highlighting an unusual divergence.
Producer Signals: Copper peaked at $3.81 per pound in September 2012, yet producers continued building inventories, implying they expected higher future prices.
Historical Comparison: During 2008, copper fell from above $4.00 to $1.25 per pound, but the 2013 inventory buildup occurred despite a much smaller price decline.
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