Copper Prices Rebound as Chinese Buyers Emerge After Selloff

Copper prices climbed on Thursday, reversing some recent losses as indicators pointed to renewed physical demand from buyers in China capitalizing on a price dip. The move came despite broader market headwinds from a strengthening U.S. dollar following an interest rate hike by the Federal Reserve.

Benchmark copper on the London Metal Exchange (LME) traded 1.2% higher to $14,408 a metric ton. The industrial metal, a key barometer for global economic health, had fallen 4% since reaching a record high of $14,875 a ton on September 10, according to Investing.com data.

Chinese Demand Indicators Strengthen

Evidence of bargain-hunting in China, the world's largest copper consumer, was seen in key market premiums. The Yangshan copper premium, a closely watched gauge of Chinese demand for imported metal, rose to $118 a ton on Wednesday, its highest level since October 2022.

Similarly, premiums in the domestic physical market, paid on top of prices on the Shanghai Futures Exchange (ShFE), climbed to 645 yuan a ton, a high not seen since December 2023. These rising premiums suggest that physical buyers are actively securing supply after the recent price correction.

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Supply and Market Context

The renewed buying interest comes as available inventories in China are low. Copper stocks in warehouses monitored by the ShFE stood at 54,780 tons, the lowest level since January 2024. The source noted that this was partly due to traders and producers shipping metal to the United States in anticipation of potential import tariffs.

Typically, a U.S. interest rate increase and a stronger dollar would make dollar-denominated commodities like copper more expensive for holders of other currencies, dampening demand. However, the strong physical buying signals from China appear to be overriding that macroeconomic pressure for now.