(Bloomberg) — Copper fell after its biggest one-day advance in more than three years, with investors shifting their focus back to the outlook for Chinese demand after a wild ride for the key industrial metal.
Prices settled lower, after surging 4.6% on Tuesday for the biggest gain since November 2022. Base and precious metals have faced extreme volatility this year, with gold and silver rallying on Wednesday after a steep drop earlier in the week as investors rapidly unwound bullish bets.
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Copper — used in pipes and batteries — is up by about 5% this year, after hitting a record above $14,500 a ton last week. The gains have been underpinned by surging speculative interest in China, as well as a strong long-term outlook built on tight supply and rising demand for applications like electrical vehicles, renewable energy and data centers.
But the spot market for copper has weakened in China as the metal became expensive for fabricators in the world’s top consumer, with fresh signs of demand softness on Wednesday as inventories jumped in London Metal Exchange warehouses in Asia.
And supplies are set to rise further. Copper traders pulled extra spot cargoes from Africa into the Chinese market, capitalizing on a brief arbitrage window last week as a surge in Shanghai futures outpaced gains in benchmark prices in London.
The China Nonferrous Metals Industry Association also forecast that the country’s refined copper output would rise about 5% this year, following a 10% surge in 2025. Local smelters — which produced 47% of the world’s refined metal last year — have been resilient despite a relentless expansion of capacity that’s triggered a collapse in processing fees.
Prices had spiked on Tuesday after the state-backed industry group called for authorities to boost strategic reserves of the metal and for Chinese manufacturers to also build up commercial stockpiles.
Daily refined copper spot trading volumes across China totaled 28,900 tons on Tuesday, according to a survey from consultancy Mysteel Global. While that’s down 24% from a three-month peak the day before, the volume is still relatively high for the period since November.
In industry news, Glencore Plc has agreed to sell 40% of its stakes in two African copper businesses to a US government-backed group as Washington pushes for more control over critical minerals. Orion CMC, a new venture led by Orion Resource Partners and backers including the US International Development Finance Corp., signed a memorandum of understanding to buy stakes in copper-cobalt mines in the Democratic Republic of Congo.