Copper Retreats from Near-Record High as Supply Concerns Persist

Copper prices eased after nearing a historic record of $12,000 a ton on Monday, as investors assessed the next move following months of strong gains.

The metal, crucial for the energy transition, touched $11,996 a ton on the London Metal Exchange before retreating. It later fell 0.1% to $11,918 a ton by 10:44 AM in Shanghai on Tuesday.

Despite the slight dip, prices remain on track for their largest annual gains since 2009, fueled by concerns over supply shortages in the coming year.

Market Sentiment Boosts Copper

Copper market sentiment has benefited from a broader risk-on environment recently. However, the primary driver has been expectations of substantial copper flows into the United States, which could deplete inventories elsewhere.

Weak Demand, Market Sentiment Drives Prices

Still, a more cautious view suggests global demand remains relatively subdued.

“The current rise in copper prices lacks support from the demand side, and is mainly driven by a combination of macroeconomic factors and supply-side dynamics,” Zhang Ping, an analyst at CCB Futures, wrote in a research note. He added that prices “are expected to continue rising, driven by market sentiment.”

Industrial metals have performed strongly this year, with aluminum, zinc, tin, lead, and nickel also poised for annual gains.

Aluminum Hits 2022 High

Aluminum prices hit their highest intraday level since the aftermath of Russia’s invasion of Ukraine in 2022 on Monday, before stabilizing on Tuesday.

Meanwhile, iron ore futures on the Singapore Exchange declined 0.7% to $104.5 a ton on Tuesday.