Copper Rebounds From Two-Day Slump as Metals Selloff Eases
Key Takeaways
- 1Copper prices recovered from multi-day lows as the broader commodity selloff paused, though prices remain significantly down from their record highs set in May.
- 2LME copper inventories have nearly doubled since mid-May, signaling a potential surplus in the spot market despite long-term scarcity forecasts.
- 3Market sentiment is heavily influenced by the lack of aggressive property-sector stimulus from China, which continues to weigh on industrial metal demand expectations.
- 4The strengthening of the U.S. dollar has acted as a headwind for dollar-denominated commodities, making copper more expensive for holders of other currencies.
Copper prices are attempting to stabilize following a sharp two-day liquidation triggered by broader risk-off sentiment and a strengthening U.S. dollar. For sophisticated investors, this rebound serves as a critical test of the 'electrification thesis' versus immediate macroeconomic headwinds. The recent selloff was largely driven by underwhelming stimulus signals from China's Third Plenum and rising inventory levels in London Metal Exchange (LME) warehouses, which have reached their highest levels since 2021. However, the long-term structural deficit remains a primary focus, as the global energy transition requires significant copper supply that current mining pipelines struggle to meet. The market is currently caught between weak physical demand in China—the world's largest consumer—and the long-term bullish narrative of AI data centers and renewable energy infrastructure. Investors should monitor the upcoming Federal Reserve policy meeting; any signals of a pivot toward rate cuts in September could weaken the dollar and provide the necessary catalyst for copper to retest its May highs. In the near term, technical support levels near $9,000 per ton will be pivotal in determining if the current rebound is a dead-cat bounce or the start of a sustained recovery.