Copper edges lower as higher oil, AI doubts weigh
- Benchmark three-month copper on the London Metal Exchange was down 0.25% at $14,320.50 a metric ton
Copper prices fell due to rising oil costs, a tech stock downturn, and doubts about AI's demand impact, despite strong Chinese demand. Analysts also forecast future surpluses.
- Higher oil prices dampening industrial production.
- Skepticism about AI as a significant copper demand driver.
- Analysts' forecasts for future copper surpluses.
SINGAPORE: Copper drifted lower on Friday, and was set to end the week little changed, with higher oil prices threatening to weigh on demand and a technology stock slump dampening risk appetite.
Benchmark three-month copper on the London Metal Exchange was down 0.25% at $14,320.50 a metric ton by 0310 GMT.
The most-traded copper contract on the Shanghai Futures Exchange fell 0.6% to 109,050 yuan a ton. Brent crude futures gained 1.44%, after Yemen’s Iran-aligned Houthis stepped up attacks on Saudi Arabia, weighing on industrial metals like copper.
“Higher oil prices dampen macroeconomic demand and act as a tax on global economic activity, dampening industrial production,” Angela Durrant, director - commodities analysis, at Commonwealth Bank, said. Elsewhere, technology stocks slumped over concerns about high AI spending.
Copper had been supported by AI infrastructure demand expectations, though attendees at last week’s London industry gathering downplayed that.
“Few participants believed AI was a significant driver of copper demand,” BNP Paribas’s head of metals strategy David Wilson and commodity desk strategist Elena Lee said in a post-LME Week note.
Analysts surveyed by Reuters have upgraded their 2027 LME copper cash price forecasts, but their expected average price is still nearly 4% lower than current prices.
They also raised their 2026 global surplus estimate to 125,000 tons and nearly doubled the 2027 surplus forecast to 92,000 tons.
Support for copper nonetheless came from signs of continued good demand in China, where inventories have waned.
The Yangshan premium, a gauge of China’s appetite for imported copper, fell 2.44% to $200 a ton on Thursday but was still close to its highest in over a decade.
Among other LME metals, aluminium ticked 0.13% higher, zinc dipped 0.19%, lead dipped 0.1%, nickel gained 0.8% and tin lost 0.48%.
On the SHFE, aluminium gained 0.51%, zinc dipped 0.12%, lead and nickel were little changed, and tin dropped 3.43%, to its lowest in over two weeks.
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