Copper prices surged to unprecedented levels on Thursday, soaring past $14,000 per metric ton as investors responded to expectations of robust demand. This remarkable increase was propelled by a weak dollar and ongoing geopolitical uncertainties, resulting in one of the largest single-day price jumps in over 15 years.
Record Highs and Volatile Trading
On the London Metal Exchange, benchmark three-month copper reached an all-time peak of $14,527.50 per metric ton, representing an 11% increase. However, by 1700 GMT, the price had moderated to $13,612.50, still reflecting a notable rise of 4% for the day. The dramatic fluctuations highlight the speculative nature of current market conditions, with traders largely ignoring warnings from analysts about the potential cooling effect of such high prices on physical demand from industrial consumers.
Neil Welsh, an analyst at Britannia Global Markets, noted, “Copper posted its biggest one-day gain in years… driven by intense speculative trading by bulls in China.” The current market frenzy is fuelled by optimism surrounding stronger growth in the U.S. economy and increased global spending in sectors such as data centres, robotics, and power infrastructure.
Demand Concerns Amid High Prices
Despite the soaring prices, concerns linger regarding actual demand in the industry. Copper is crucial for the energy transition, widely used in power generation and construction. However, global inventories, particularly in the U.S., remain elevated. In China, which is the world’s largest consumer of copper, the Yangshan copper premium—a key indicator of demand for imported copper—dipped to $20 per ton on Wednesday, down from $55 in December and marking its lowest level since July 2024.
The most-active copper contract on the Shanghai Futures Exchange closed the day up by 6.7% at 109,110 yuan (approximately $15,708.77) per ton after briefly touching a record of 110,970 yuan. This rise occurred despite signs of weakening physical demand in the Chinese market, underscoring the disconnect between speculative trading and actual consumption needs.
Broader Metal Market Movements
The surge in copper prices has influenced other metals as well, with erratic trading patterns observed across the board. Notably, LME tin surged to a record high of $59,040 per ton, only to later fall by 2.5% to $54,540. Similarly, aluminium rose by 3% to $3,356 per ton, the highest level since April 2022, before experiencing a slight pullback. Zinc increased by 1.4% to $3,412 per ton, reaching its strongest point since August 2022, while lead and nickel saw minor fluctuations.
Traders attribute the heightened interest in metals to a broader trend favouring hard assets, with gold and silver also reaching new highs amid rising geopolitical tensions. A weaker dollar, close to multi-year lows, has further enabled commodities priced in U.S. currency to become more affordable for international buyers.
Why it Matters
The surge in copper prices reflects not only market speculation but also the critical role copper plays in the transition to renewable energy and advanced infrastructure. As industries pivot towards sustainable practices, the demand for copper is likely to remain strong. However, the disconnect between speculative trading and the realities of physical demand raises questions about market stability and the sustainability of these price levels. Stakeholders in various sectors must navigate these complex dynamics as they assess the future of copper and other metals in an increasingly volatile trading environment.
