NewsFlash / Copper / Ultra-Low COMEX Copper Inventories Trigger Rare Short Squeeze, Driving Price Spreads to Extreme Levels
Ultra-Low COMEX Copper Inventories Trigger Rare Short Squeeze, Driving Price Spreads to Extreme Levels
iconJan 10, 2025 12:34
[SMM Analysis]: In May 2024, due to ultra-low COMEX copper inventories, a historically rare short squeeze occurred in the COMEX copper market. A large influx of funds went long in the COMEX copper futures market, creating a squeeze on arbitrage funds and hedging enterprises already in the market. The intraday price spread between LME and COMEX copper prices once exceeded $1,000/mt, with the cross-market price spread widening to extreme levels. Traders began transporting copper to US warehouses to profit from the ultra-high price spread and alleviate the pressure from the short squeeze, leading to a gradual rebound in COMEX copper inventories. By January 9, 2025, the intraday premium of COMEX copper over LME copper exceeded $600/mt, nearing historical highs. Meanwhile, COMEX inventories reached historical highs, making it difficult for fundamentals to support such a large price spread. What is the reason behind this?
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