Copper: China demand and Shanghai speculation – Commerzbank

Commerzbank’s Barbara Lambrecht and Volkmar Baur report that Copper and broader base metals have eased from recent highs, with China’s influence on global metal demand growth declining compared to pre-pandemic years. A speculative rally on the Shanghai Futures Exchange pushed Copper to record local prices before open interest fell back, dragging both Shanghai and London Copper prices lower in recent sessions.

China’s shifting role and fading copper rally

"Base metals rose slightly again over the last two trading days, but at around 5,400, the London Metal Exchange index was still almost 4% below its record high at the end of January. In the run-up to the Chinese New Year, during which the stock exchanges will be closed from next Monday, activity is likely to slow down: according to a survey by the consulting firm Mysteel, some companies in the copper industry in the south of the country already halted production at the end of January and do not intend to resume until March."

"The research group Bloomberg Intelligent (BI) notes that China's share of global metal demand growth has fallen significantly: From 2020 to 2025, the country accounted for only an estimated 60% of the increase in metal demand, whereas before the pandemic, from 2008 to 2020, China's contribution to growth was 137%, compensating for declining demand elsewhere."

"At the end of January, copper prices on the Shanghai Futures Exchange rose to a record high of over RMB 100,000 per ton, pushing up prices on the London Metal Exchange as well. In Shanghai, a ton cost the equivalent of more than USD 15,000, which contributed to the record prices on the London Stock Exchange."

"According to reports, the price rally in Shanghai was primarily driven by speculative investments in metals. Evidence of this can be found, for example, in the sharp rise in the number of open contracts for futures and options on copper on the Shanghai Futures Exchange, which also reached a multi-year high."

"Over the past 10 days, the number of open futures contracts and options on copper in Shanghai has fallen significantly again and is currently back to around the average level of last year. As a result, the price of copper in Shanghai has also fallen by 4.5% since the end of January, contributing to the decline in prices in London."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)