Copper Prices Rebound as Chinese Buyers Emerge After Selloff

Copper prices climbed on Thursday, buoyed by signs that buyers in China are returning to the market to take advantage of a recent price decline from record highs. The rally for the industrial metal occurred despite a strengthening U.S. dollar, which typically acts as a headwind for commodity prices.

Price Action

Benchmark copper on the London Metal Exchange (LME) advanced 1.2% to trade at $14,408 a metric ton in official rings, according to a report from Investing.com. The metal, a key component in the power and construction industries, has fallen approximately 4% since hitting a record high of $14,875 a ton on September 10.

China Demand Indicators Strengthen

Evidence of renewed buying from the world's largest copper consumer is mounting. Key metrics signaling strong physical demand include:

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• The Yangshan copper premium, a closely watched gauge of Chinese import demand, rose to $118 a ton on Wednesday, its highest level since October 2022.
• Domestic physical premiums paid over prices on the Shanghai Futures Exchange (ShFE) climbed to 645 yuan a ton, the highest since December 2023.

Adding to the tight supply picture, copper inventories in warehouses monitored by the ShFE fell to 54,780 tons, the lowest level since January 2024. The source noted this was partly due to traders shipping metal to the United States ahead of potential import tariffs.

Market Context

The rebound in copper prices is notable as it defies pressure from a stronger U.S. dollar. The dollar gained after the U.S. Federal Reserve raised interest rates and affirmed its commitment to controlling inflation. A rising dollar typically makes greenback-priced commodities more expensive for buyers using other currencies, but the strong physical demand signals from China appear to be overriding this factor for now.