Copper prices fell by as much as 0.7% on Monday, settling at $10,340 per ton on the London Metal Exchange. This decline was primarily attributed to weaker-than-expected industrial data from China, which dampened the demand outlook for the metal. The previous Friday, copper had marked its 11th gain in 12 weeks, reaching $10,460 a ton, driven by signs of picking up Chinese demand and anticipation of maintenance-related supply tightness.
The recent drop in copper prices reflects a shift in market sentiment, moving away from a focus on supply constraints towards concerns over demand. Earlier in September, copper had seen volatility, with expectations of potential U.S. tariffs on refined copper initially driving prices higher. However, this rally reversed when the White House signaled that a final decision had not yet been made, highlighting the sensitivity of copper to geopolitical and economic indicators.
While some Chinese end-use sectors, such as power grids and new energy, are expected to provide stable demand, traditional drivers like real estate and home appliances remain weak. For instance, home appliance production schedules for October show a rebound, but this is largely due to stocking for promotional events rather than genuine retail sales growth. This mixed demand picture, combined with the latest industrial data, contributes to a more cautious outlook on copper consumption in China.
Despite the recent decline, copper has seen strong support from tight physical conditions in China, with Shanghai copper stocks falling to their lowest levels since December 2023. Imports have also flowed directly to fabricators, keeping spot supplies limited. However, investor positioning has remained subdued, with net bullish copper futures positions declining for six consecutive weeks, suggesting that underlying investor confidence may not fully align with the recent price increases driven by physical market tightness.
The current market environment for copper is characterized by a tug-of-war between supply tightness and demand uncertainties. Planned maintenance at Chinese refineries in October and November could further limit metal availability, potentially offering some support to prices. However, the broader economic trends in China, particularly in key copper-consuming industries, will remain crucial in determining the metal's price trajectory in the coming months.
