Bearish momentum grips copper as physical supplies surge past demand, with LME inventories hitting a 17-month high. Futures prices remain elevated despite weak industrial demand, particularly in China, where spot market stocks reached a record 2024 level. The disconnect between oversupplied warehouses and bullish futures bets has traders questioning sustainability.

Tariff trade collapse fuels market turbulence. US copper futures premiums evaporated after Trump's tariff threats failed to materialize, erasing the price arbitrage that drove global cargoes to American ports. Traders like Mercuria Energy Group are now offloading metal onto LME exchanges, signaling shifting dynamics as buyers reclaim pricing power.

Chinese demand weakness accelerates correction. Manufacturers are substituting copper with aluminum in products like air conditioners, while smelters flood the market with excess production. Key buyers rejected a $350-a-ton 2026 supply offer from Codelco, marking the hardest negotiations in decades for producers. Seasonal factory shutdowns further depress near-term consumption.

Record inventory levels threaten near-term correction. Global exchange stockpiles rose over 500,000 tons year-to-date, with private Chinese holdings matching 2016 peaks. Despite lingering bullish bets (bulls still outnumber bears 2:1), technical indicators show copper on track for a 3.7% weekly drop on LME, testing support levels not seen since 2021. The fundamental imbalance suggests prolonged price pressure unless demand rebounds decisively.