Copper is heading for its third consecutive weekly loss, with rising exchange inventories and softer demand signals starting to weigh on sentiment.
After hitting a record high in January on strong speculative flows, the red metal is now facing a different backdrop. Prices have steadied, but the broader tone has turned cautious.
Here is a detailed breakdown of what is happening and what it could mean:
Price Action and Weekly Trend
• Three month copper futures on the London Metal Exchange were trading around 12,801 dollars per ton in late Asian hours
• Prices are set to end the week about 0.6 percent lower
• If confirmed, this would mark the longest weekly losing streak since 2024
The pullback is not sharp, but it is persistent. That shift in momentum matters, especially after January’s record highs.
Inventories Climb to 11 Month High
One of the clearest pressure points is rising exchange tracked inventories.
• Stockpiles in LME warehouses have climbed to an 11 month high
• Elevated prices appear to be discouraging physical buying
• Industrial users are showing less urgency to secure supply
When inventories rise alongside high prices, it often signals that real demand is not keeping pace with market expectations.
This is particularly important in copper, which is closely tied to construction, infrastructure, power, and manufacturing cycles.
Federal Reserve Signals Add to Pressure
Macro factors are also playing a role.
Minutes from the January meeting of the Federal Reserve showed policymakers remain cautious about cutting rates this year.
• Officials signaled they are wary of easing too quickly
• Expectations for aggressive rate cuts have been dialed back
• Higher for longer rates can weigh on growth linked commodities
Copper is often seen as a barometer of global growth. When rate cuts look less certain, sentiment toward industrial metals can soften.
China in Focus as Markets Reopen Soon
Trading volumes have remained thin this week because Chinese markets are closed for the Lunar New Year.
China is the world’s largest copper consumer. Its reopening next week will be closely watched.
According to Morgan Stanley analysts, including Amy Gower:
• Chinese copper demand has been weakening since September
• Domestic inventories in China have been rising
• If global inventories continue to build, investors may assign more weight to weak Chinese demand
So far, copper has shown resilience despite softer Chinese trends. But sustained inventory builds could shift that narrative.
Other Metals Snapshot
• Aluminum rose about 0.3 percent
• Nickel slipped roughly 0.3 percent
Movements across the base metals complex remain mixed, reflecting uncertainty rather than a broad based selloff.
Going forward, a few key questions stand out:
• Do LME inventories continue to rise over the next few weeks?
• How strong is physical demand in China after markets reopen?
• Do rate cut expectations shift again based on upcoming US data?
Copper’s long term story around electrification, renewable energy, and infrastructure remains intact. But in the short term, inventories and macro policy expectations are clearly in the driver’s seat.
What is your view?
Is this a healthy consolidation after January’s rally, or an early signal that demand is slowing more than expected?