Copper Prices Recovers After Recent Slump
Copper prices have soared from the lowest close in five months, as evidenced by recent orders to withdraw the metal from London Metal Exchange (LME) warehouses. This activity suggests that the slump in China’s demand for copper may have reached its nadir.
Three-month futures prices rose 1.3% as of 3:11 p.m. in London, partly driven by the largest cancellation of LME copper contracts since April. This increase follows a significant drop in copper prices—down 19% from May’s peak—caused by a surge in cathode exports from China to the LME network. China, which accounts for more than half of global copper consumption, experienced weakened demand due to sluggish industrial data and a dip in investment in artificial intelligence data centers.
Market Dynamics and Future Outlook
Reopening an arbitrage window for importing refined copper into China has led to higher premiums for the metal in the region, while orders to withdraw copper from the LME have increased. According to LME data, on-warrant stocks fell by 7,375 tons on Monday.
Global investors are cautiously returning to equities, bonds, and commodities following a market downturn driven by concerns over a global economic slowdown. Copper prices saw an uptick late last week amid signs of resilience in the U.S. labor market, offsetting a fifth consecutive week of losses related to global economic fears. Jinrui Futures Co. predicts copper could rebound towards $9,100 per ton as recession fears ease, though further macroeconomic guidance and inventory drawdowns are awaited.
Nevertheless, the upside for copper might be constrained due to an anticipated global surplus. According to Macquarie Group (ASX:MQG), updates to demand and refined production have accelerated the market into a surplus sooner than expected, with projections indicating this condition may persist for the next two years. Analysts, led by Alice Fox, forecast copper averaging $9,000 per ton for the remainder of this quarter and $9,175 per ton in 2025. All base metals showed gains, with lead rising by 1.4%.
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Author Faith Yakubu 
