Copper’s Comeback Stalls as Chinese Stimulus Disappoints
Copper prices took a hit on Tuesday, with December copper contracts on the COMEX falling nearly 3% to $4.44 per pound or approximately $9,790 per tonne. This marks a significant retreat from the highs of late September when copper briefly surged above $10,000 a tonne following a series of stimulus measures from Beijing aimed at boosting China’s slowing economy and its ailing property sector. While the May rally saw copper hit an all-time high of $5.20 per pound or about $11,500 per tonne, recent market dynamics suggest that such heights may be out of reach this quarter.
Investors had high hopes for a second wave of Chinese stimulus on Tuesday, as China’s National Development and Reform Commission was expected to announce additional support focused on infrastructure investment, fiscal policy, and energy transition projects. This anticipated “bazooka” of spending was seen as a potential catalyst for further price increases. However, the announcements fell short of expectations, and traders reacted by selling off copper, pushing prices down by over 7% from their September peak. The market appears increasingly cautious, as traders question whether fundamentals can support sustained price increases in the absence of more aggressive Chinese intervention.
Adding to the caution, market analysts at Benchmark Mineral Intelligence have highlighted that copper has been in a state of contango on the London Metal Exchange (LME) during the recent price rally. This market structure, where futures prices are higher than current spot prices, suggests a weaker short-term demand outlook and raises concerns about speculative pressures driving prices up too quickly. Recent data from the COMEX backs this up, with the latest Commitment of Traders report showing a surge in fund activity, as non-commercial net positions rose to the highest level since July. This pattern is reminiscent of the speculative rally that fueled the May price spike, though copper stock levels on the COMEX—currently at 71,000 tonnes—may prevent a similarly dramatic escalation.
Ultimately, while copper remains a key material for the energy transition, the recent price rally appears to be losing momentum amid uncertain Chinese policy support and concerns over market fundamentals. Investors who were banking on a repeat of May’s price action may need to recalibrate their expectations, as near-term gains could be limited by rising inventories and global economic headwinds. With Chinese stimulus efforts appearing more restrained than anticipated, and demand signals in the U.S. and Europe muted, copper’s trajectory for the remainder of the year may continue to face challenges.
