Copper prices have been on a very strong rally in line with other commodities.

Futures markets had rallied above $9,000 a ton on the reflationary trade narrative. This is all in the hope that a global vaccine rollout would bring economies back to normal. However, the recent surge higher in bond yields is causing markets to worry that things are going too far, too quickly.

Copper is vulnerable to come under pressure if those yields keep heading higher. On top of the bond yield rise on faster rate rises being anticipated stockpiles in copper are also very high.

Bloomberg reports copper inventories are at elevated levels

According to Bloomberg, the levels of copper sat in China’s bonded warehouses have stayed high since the surge higher from July last year. Stockpiles have also been reported to be picking up in Shanghai, London, and New York since late February. Furthermore, with reports that China is also talking about walking back from easy policy copper looks like it will find sellers on the short term rallies higher.

However, deeper pullbacks should still find buyers as the return to global growth should support prices over the medium term.