China’s metals mania sends copper soaring past $14,500 a ton

The industrial metal, which is used in almost every electrical application, has risen about 21% since the start of December, firing up copper bulls who have long been predicting a surge in prices

• Copper prices hit a record high above $14,500 per ton, up over 11%, then fell back.
• Chinese investors fueled the rally with speculative trading on the Shanghai exchange.
• Metals rallied on a weaker US dollar and rising rate cut expectations despite low demand.

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Copper surged by the most in more than 16 years, after a wave of buying from Chinese investors triggered one of the most dramatic moves in the market’s history.

Prices gained as much as 11% to trade above $14,500 a ton for the first time ever, before a sharp retracement on Thursday afternoon as the dollar jumped.

The industrial metal, which is used in almost every electrical application, has risen about 21% since the start of December, firing up copper bulls who have long been predicting a surge in prices.

“You wait a lifetime for markets like this,” said Mark Thompson, a mining executive and former trader at Trafigura Group with three decades of experience in the copper market. “We are one supply disruption away from $20,000.”

Chinese investors are piling into metals as they ride a powerful wave of momentum that has lifted everything from tin to silver to record highs. The initial surge in copper took place at a time of day when Chinese traders dominate flows, with prices on the London Metal Exchange rising more than 5% in less than an hour starting at 2.30 a.m. London time.

“This is all driven by speculative funds,” said Yan Weijun, head of nonferrous metals research at Chinese trader Xiamen C&D Inc. “It’s likely all Chinese money given the surge is in Asian hours.”

Prices rose more than $1,400 a ton before sliding by as much as $1,000 in less than an hour as US markets opened with a broad risk-off mood.

Copper has long been a favorite of investors who see the energy transition and the growth of data centers driving demand. Still, the recent surge in prices has come in spite of indications of weak demand in China itself, which accounts for about half of physical consumption of the metal, and a widening contango on the LME, an indication of ample supplies.

The speculative frenzy has driven a surge in volumes on the Shanghai Futures Exchange, China’s top commodities trading platform. January was already the busiest month on record for the SHFE’s six base metals as of last week, and copper racked up its second-biggest daily trading volumes ever on Thursday.

It’s been an eye-watering few weeks for commodities, which have been aided by a sinking US dollar, rising demand for real, physical assets, and elevated geopolitical tensions as the Trump administration follows a more assertive foreign policy. Most recently, speculation that the next Federal Reserve chief will be more dovish than Jerome Powell has aided the rally.

“Commodities are taking turns to rally,” said Eric Liu, deputy general manager of ASK Resources Co. “Copper has been hovering around $13,000 and funds have been brewing over the metal for some time.”

Copper was up 3.1% at $13,495.00 a ton on the LME. Its intraday move was the biggest since 2009 — when China was rolling out massive stimulus measures in the aftermath of the great financial crisis. SHFE futures reached 114,000 yuan ($16,400) a ton as the exchange reopened for evening trading, following a 5.8% increase to 109,110 yuan at the close on Thursday. Other metals also rallied sharply in the morning before retreating in the afternoon, with aluminum down 1.5% and zinc up 2% in London.

Fed Chair Powell talked up a “clear improvement” in the US economic outlook as the bank kept borrowing costs on hold on Wednesday. His tenure ends in June, after which President Donald Trump may be better positioned to step up his campaign for lower rates.

“Under the cycle in which the US maintains interest-rate cuts, the expectation for upward movement in copper prices has not changed,” said Chi Kai, chief investment officer at Shanghai Cosine Capital Management Partnership. “As for how high prices can rise, there is no clear expectation as long as the US continues to push AI, chips and power construction.”

Investors have been flocking in particular to metals needed in major growth markets. Tesla Inc.’s plan to spend $20 billion this year shifting resources to robotics and AI has underscored investment prospects. Copper, aluminum and tin would all be beneficiaries.

But the rally has been broad-based, with iron ore futures in Singapore gaining as much as 2.5%.

The advance in metals came after a gauge of the US currency sank to its lowest level in more than four years, with Trump signaling he was unconcerned by the weakness. That slide makes commodities more attractive for many buyers.

There are plenty of voices warning that the spectacular gains in metals have run ahead of real-world demand. There’s likely a “technical adjustment” coming as physical buyers in China balk at higher prices, Goldman Sachs Group Inc. co-head of China equities Trina Chen told Bloomberg TV on Wednesday.