The Warehouses are Empty: Above Ground Metals Supplies at Multi-Decade Lows

Get Ready: The Mining Investment Environment

Commodity Insights

Listen to Rob Gray, Chief Commodities Strategist, Resource Capital Funds, discuss how underinvestment in metals and mining is leading to historic lows in above ground metal supplies.

Filmed during RCF’s 2023 Macroeconomic and Mining Environment Update in March 2023

(This shows) the above ground supply of base metals across all exchange warehouses. So, this is the LME warehouses. This is SHFE in Shanghai. This is Comex for those Comex traded base metals. Key message is the warehouses, they’re empty. We’re down to a few days’ supply in terms of what’s available in a futures exchange base warehouse.

Now, that doesn’t mean we’re going to run out of copper or tin or zinc tomorrow because there’s plenty of consumer and producer inventories and the traders like Glencore and Trafigura are holding metal and supply into their own commercial arrangements. But what’s interesting is the exchanges can be used as a bit as a stock and that can be drawn upon. But that stock’s been fully drawn and you can see the strength across the prices in response to above ground metal is visibly very, very scarce.

Two days ago, Trafigura at a mining conference in Switzerland, their CEO informed the market that at the beginning of the year we’re down to three and half days of copper supply. And this is a market that’s used to having 10-15-20 days of supply. So, the warehouses are empty and this is going to drive the need to start to see more capital flow. We’ll see it in price first. All base metal prices when we get even lower, and we’re very near that point, despite what’s happening economically, supply set the price, and in all likelihood, in balance of probabilities, all these prices are going to head significantly higher over the next year or so.

What’s discussed: 

  • Warehouses of above ground metals are empty, we are down to a few days supply in a futures exchange-based warehouse
  • All base metals affected including: Aluminium, Copper, Zinc, Nickel, Lead, and Tin
  • Prices of metals are likely to increase due to historic lows in supplies

Like what you’re reading? Subscribe to our top stories.

Important Information 

This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the commodities landscape.  

The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Resource Capital Funds and/or its affiliates (together, “RCF”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.   

None of the information constitutes a recommendation by RCF, or an offer to sell, or a solicitation of any offer to buy or sell any securities, product or service. The information is not intended to provide investment advice. RCF does not guarantee the suitability or potential value of any particular investment. The information contained herein may not be relied upon by you in evaluating the merits of any investment.  

Investing involves risk, including possible loss of principal.