LME introduces new restrictions for large copper position holders

The London Metal Exchange (LME) announced new restrictions for owners of large short-term positions in response to falling inventories. This decision was made after nearby copper contract premiums hit their maximum since October 2022.

Due to the recent low copper reserves, the LME’s Special Committee recommended introducing additional requirements to prevent an undesirable market situation. The new rule expands existing restrictions on "tom-next" positions, which are combined transactions that begin tomorrow and end the day after. Now, holders of long "tom-next" positions that exceed the total level of reserves on the exchange must return them to the market at no premium.

Currently, the premium for a cash copper contract compared to a three-month forward is $180 per ton against $3 a month ago. The red metal's stocks at LME warehouses have fallen by more than 60% since mid-February and now stand at 99.2 tons, the lowest since August 2023.