Copper’s Crossroads: Navigating Price Volatility and Inventory Shifts
The global copper market is currently experiencing a complex interplay of factors, from fluctuating inventory levels to anticipation surrounding monetary policy. While the New York Stock Exchange began February 19, 2026, with an upward trend ahead of the release of the January FOMC minutes, the London Metal Exchange (LME) copper market is grappling with rising stockpiles. This creates a dynamic environment for investors and industry stakeholders alike.
Inventory Surge and Price Reactions
LME copper inventories have been steadily increasing, reaching an 11-month high of 224,625 tons. This surge, driven by inflows to locations like New Orleans and Kaohsiung, is somewhat unusual given concurrent price increases driven by low-volume buying. The United States currently holds approximately 18% of the total LME inventory, with an additional 538,122 tons held at the Comex exchange.
Analysts note the atypical situation of rising inventories alongside increasing prices. This suggests a potential shift in consumption patterns, with Panmure Liberum’s Tom Price pointing to a decrease in copper consumption within the United States over the past 12 months. Despite this, Goldman Sachs anticipates further price increases, projecting a price of $11,200 per ton by the fourth quarter of 2026, particularly if strategic stockpiling by the US and China gains momentum.
FOMC Minutes and Market Sentiment
The impending release of the FOMC minutes is a key driver of market sentiment. The January meeting saw a 10-1 vote in favor of maintaining interest rates and investors are closely watching for clues regarding the future path of monetary policy. Concerns about a cooling inflation rate coupled with a stabilizing labor market are leading analysts to believe a rate cut is unlikely in the near term.
The tech sector’s recent stabilization has also contributed to positive market sentiment, with low-price buying providing support. FP Market’s Aaron Hill suggests the market is anticipating continued rate holds, and the FOMC minutes will be scrutinized for indications of how long this stance might last.
China’s Influence and Supply Dynamics
The Shanghai Futures Exchange is currently closed for the Lunar New Year (February 15-23), reducing trading volume and potentially contributing to the current market volatility. The absence of many Chinese traders during this period creates a unique dynamic, allowing for short-term buying opportunities as highlighted by Panmure Liberum. China’s policies regarding copper production capacity also play a significant role in global supply.
Global Copper Reaching 21-Year Highs in Inventory
Globally, copper inventories have surpassed 1.01 million tons, the highest level in 21 years. This surge has contributed to a 12% price decline from January highs, with copper currently trading at $5.76 per pound (or $12,700 per ton). This significant inventory build-up is a key factor influencing the current market conditions.
Frequently Asked Questions
Q: What is the significance of the FOMC minutes?
A: The minutes provide insights into the Federal Reserve’s reasoning behind its interest rate decisions and potential future policy adjustments, impacting market sentiment.
Q: Why are copper inventories rising despite price increases?
A: This is an unusual situation potentially linked to decreased copper consumption in the US and strategic stockpiling activities.
Q: What is the outlook for copper prices in 2026?
A: Goldman Sachs projects a price of $11,200 per ton by the fourth quarter of 2026, contingent on factors like strategic stockpiling.
Q: How does the Lunar New Year impact the copper market?
A: The closure of the Shanghai Futures Exchange during the Lunar New Year reduces trading volume and can increase market volatility.
Did you know? The LME copper price reached a record high of $12,960 per ton in late December 2025, driven by supply concerns and strong demand.
Pro Tip: Keep a close watch on inventory levels at both the LME and Comex exchanges, as these are key indicators of market trends.
Stay informed about the evolving copper market. Explore our other articles on global commodity trends and financial market analysis for further insights.
