Copper Prices Rise as Chinese Buyers Capitalize on Recent Dip

Copper prices advanced on Thursday, buoyed by signs that Chinese buyers are re-entering the market to capitalize on a recent price drop from record highs. The rally occurred despite headwinds from a stronger U.S. dollar following a Federal Reserve interest rate increase.

Prices Rebound from Record Peak

Benchmark copper on the London Metal Exchange (LME) rose 1.2% to settle at $14,408 per metric ton in official trading, according to a report from Investing.com. The industrial metal, often seen as a barometer for global economic health, had retreated 4% since hitting a historic high of $14,875 per ton on September 10.

The price recovery defied typical market dynamics, as the U.S. Federal Reserve's announcement of a rate hike strengthened the dollar. A more valuable dollar usually makes commodities priced in the currency more expensive for holders of other currencies, dampening demand.

China's Demand Signals Strength

Several key metrics point to a resurgence in buying from China, the world's largest consumer of copper, suggesting that underlying physical demand remains strong despite recent price volatility.

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Key indicators of this renewed appetite include:

• The Yangshan copper premium, a closely watched gauge of Chinese import demand, climbed to $118 per ton on Wednesday, its highest level since October 2022.
• The domestic spot premium for physical copper over Shanghai Futures Exchange (SHFE) prices jumped to 645 yuan per ton, a peak not seen since December 2023.
• Copper inventories in SHFE-monitored warehouses fell to 54,780 tons, the lowest level since January 2024.

Market Implications

The decline in Chinese stockpiles was partly attributed to traders shipping metal to the United States in anticipation of potential import tariffs, the source noted. For investors, the return of Chinese "dip-buying" provides a fundamental support for copper prices, potentially establishing a new floor after the recent correction.

The market now faces a tug-of-war between these robust physical demand signals from China and broader macroeconomic pressures from a strong dollar and tighter global monetary policy.