(Bloomberg) — US copper prices fell sharply on Wednesday as traders rushed in to square off their positions before a long holiday in China.
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Futures on New York’s Comex sank as much as 7.2% to $4.524 per pound on Wednesday, before paring some of the losses.
The selloff came as Chinese investors engaging in arbitrage deals across New York, London and Shanghai are unwinding their positions. Wednesday is the last trading day in China before a five-day Labour Day holiday.
Prices are also under pressure because of weaker fundamentals in top copper consumer China. A key manufacturing indicator came significantly weaker than economists expected, signaling factories switched from expansion to contraction as trade tensions with the US mount.
That has erased the optimism over the past couple of weeks, including narratives of a significantly tighter copper market in China as stockpiles plunged and import premiums rebounded.
Oversupply of the metal, mainly used in power infrastructure for its conductivity, is expected to grow globally this year, an industry group said on Tuesday.
Copper also fell on the London Metal Exchange, dropping 3.3% to settle at $9,125 a ton at 5:50 p.m. local time. Other main LME metals all declined.
–With assistance from Yihui Xie and Yvonne Yue Li.
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