What’s going on here?
Copper prices took off this week as Chinese manufacturers loaded up on metal before the country’s week-long National Day holiday, boosting both Shanghai and London copper contracts.
What does this mean?
Chinese factories and manufacturers seized the chance to buy copper at recently lower prices, driving a spike in trading on the Shanghai Futures Exchange and lifting London’s three-month copper contracts too. This isn’t just routine restocking: there are strong expectations that smelters in China could cut production this fall, mainly because byproduct sulfuric acid prices have dropped and processing fees are scraping record lows. That puts pressure on producers to consider dialing back output, with GF Futures flagging the potential for supply shortfalls. On the flip side, a stronger US dollar is tempering copper’s rally by making metals pricier for buyers using other currencies. The rest of the industrial metals market is also mixed, with investors keeping a close eye on supply shifts and signals from upcoming US–China talks.
Why should I care?
For markets: China’s copper moves ripple across markets.
Copper tends to be the market’s go-to signal for global manufacturing health, and China makes up about half of the global demand. So, when Chinese buyers bulk up inventories, it boosts confidence and can help prices recover faster. Still, a firm US dollar—trading near 7.11 yuan—means copper stays expensive for most international buyers, tempering the potential for a full-blown rally. Traders are also watching for any cues from US–China talks, which could quickly shift the market’s direction.
The bigger picture: Industrial metals face a delicate balancing act.
The latest copper restocking is part of a broader story—production cut rumors, shifting byproduct prices, and currency swings are all muddying the forecast for industrial metals. Smelters may have no choice but to reduce output if margins stay this tight, and that could spark more price moves across the sector. With major policy decisions and supply tweaks expected in both Beijing and Washington, industrial metals are set for a volatile ride as 2025 heads into its final stretch.
