As investors sought to cash in on the significant rise in the industrial metals market, copper prices continued their downward trend from record levels, and aluminum prices fell from a two-year high.
Copper prices fell for the sixth time in seven trading days, dropping by 3.8% in widespread selling on the London Metal Exchange. This year, copper prices have risen significantly as mine supply tightens and macro investors become more optimistic about the global economy. However, there have been warnings that the rally has outpaced fundamentals.
Amelia Xiao Fu, head of commodities strategy at BOCI Global Commodities UK., said, “At such high price levels, there is a clear disconnect between investors’ expectations and the reality of the physical market. We will continue to see a power struggle between macro participants and the physical market.”
Investor interest in copper is supported by initial improvements in the manufacturing and industrial sectors, a sharp tightening of global mine supply, and increasing optimism about the use of renewable energy and artificial intelligence.
As copper prices soar, investors and traders holding short positions are facing increasing pressure, but as prices fall, the balance of power is shifting.
As contract prices soared above a record $11,100 per ton, consumers also reduced their purchases, but if copper prices fall to $9,500, they may start returning to the market.
Xu Wanqiu, an analyst at Cofco Futures Co., said, “Downside potential may be limited, and the metal bull market is not over. As prices fall, investors are also seeking to buy, while Chinese smelters are facing increasing production cuts due to ore shortages.”
As of 3:30 p.m., London copper prices fell by 2.9% to $10,159 per ton, leading the decline in all metals on the London Metal Exchange.
Aluminum prices fell by 2.7% to $2,692.50 per ton, after previously reached $2,799— the highest level since June 2022. Previously, China has taken measures to strengthen capacity management for multiple metals to achieve emission targets.
