Copper falls, set for worst week since March on AI rout
- Copper on the London Metal Exchange was down 0.61% at $13,759 a metric ton
Copper prices saw their largest weekly drop since March, driven by a tech stock rout and concerns over AI investment, though supply constraints offered some market support.
- Impact of tech stock downturns and AI investment sentiment.
- Global copper supply constraints and tight metal availability.
- Challenges for Chinese smelters and rising import demand.
SINGAPORE: Copper dropped on Friday and was set for its biggest weekly drop in London since March, as a rout in technology stocks battered markets.
Benchmark three-month copper on the London Metal Exchange was down 0.61% at $13,759 a metric ton by 0300 GMT.
That placed it on track to fall 2.79% in the week.
The most-traded copper contract on the Shanghai Futures Exchange fell 0.93% to 107,000 yuan ($16,046.79) a ton.
The weakness reflects worries over AI investment, with copper increasingly influenced by “sentiment towards data centre expansion,” said Craig Lang, principal analyst at CRU.
Asia’s tech-heavy markets crumbled on Friday after the US Nasdaq Composite marked its deepest one-day drop in 19 months on Thursday. Democratic wins in the US midterms have fueled concerns that new regulatory oversight could cap the AI buildout.
On the other hand, supply constraints cushioned copper’s decline.
“I would be cautious about calling this a sustained correction, given ongoing mine supply challenges and exceptionally tight metal availability outside the US,” Lang said.
Chinese smelters have been squeezed by deeply negative treatment charges – meaning they are paying miners to smelt their concentrate – and falling sulfuric acid prices which are eroding a key source of profits.
The closely watched Yangshan copper premium, a gauge of appetite for imports into key consumer China, increased to $210 a ton on Thursday, its joint highest since Shanghai Metal Markets began tracking it in 2012.
Meanwhile, warehouse inventories outside the US have been drawn down as material was pulled into the country ahead of a potential tariff on imports of refined copper.
“These physical constraints should provide some support against weaker investor sentiment,” Lang said.
Among LME metals, aluminium dipped 0.13%, zinc lost 0.5%, lead dipped 0.11%, nickel lost 0.41% and tin gained 1.1%.
On the SHFE, aluminium ticked 0.11% higher, zinc lost 0.96%, lead gained 0.72%, nickel rose 2.04% and tin dropped 3.18%.