Copper Sinks as Frenzy in China Ebbs at Close of Turbulent Week

Copper wires at a wholesale metal market in Mumbai, India. Photo by Dhiraj Singh /Bloomberg

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(Bloomberg) — Copper sank from a record at the end of an extraordinarily volatile week, with trading marred by an glitch on the London Metal Exchange, as Chinese investors pulled back and the US dollar rose.

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Benchmark three-month futures dropped almost 4% to near $13,000 a ton on the LME, after peaking above $14,500 on Thursday. Still, copper remains on course for a solid weekly gain, the sixth in the past seven.

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With global investors focused on metals after a series of major price swings in commodities, the LME — the trading venue that has set global prices for base metals for more than a century — suffered a one-hour delay to the start of trade due to technical issues.

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Copper has surged in the opening weeks of the new year, caught up in a wave of enthusiasm for base and precious metals that’s been especially evident in China, Asia’s largest economy and the leading consumer. The frenzy has been supercharged by optimism about demand given the energy transition, as well as a steady weakening in the US dollar, which hit a four-year low.

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“The market’s expectations have become too uniform at this stage and need some adjustment,” said Jerry Zhang, a trader at Ningbo Meishan Bonded Port Hongyi Investment Management Partnership Co. “Volatility has also become quite high, so we prefer to control risk and avoid participating too much.”

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The US dollar rose on Friday — making commodities less attractive for many investors — amid speculation that the Trump administration is preparing for the president to nominate Kevin Warsh to be the next Federal Reserve chair.

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Copper traded 1.7% lower at $13,383 a ton on the LME at 12:36 p.m. in Singapore. The five other base-metal contracts — for aluminum, zinc, lead, nickel and tin — were all lower on the day.

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Elsewhere, gold, silver, crude oil and iron ore also declined.

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The rush into copper — as well as other base metals — lifted the catch-all LMEX Index to a record on Thursday, topping the peak that was set in 2022.

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Copper — a mainstay metal for wiring and batteries — has been in focus in recent quarters amid mine snarls, concerns about possible US import levies, and the outlook for demand given the global push for electrification.

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While prices remain on course for a weekly gain, some metrics suggest that near-term conditions are not tight. The spread between cash prices and three-month futures is more than $90 a ton in contango, a bearish pattern.

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Ahead of Friday’s moves, Citigroup Inc. flagged copper may rally further in the near term, while also cautioning that resistance from physical users facing higher costs could be a drag over the full year.

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Although a jump for copper to $15,000 to $16,000 “does not look implausible,” the base case remained for a greater physical-market pushback, and that would mean copper averages $13,000 in 2026, the Citi analysts said.

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