Copper prices rebound as position rolling offsets China property worries

Copper prices increased on Monday, with contract expiry-related position rolling by some traders overriding current concerns.

This move helped the market temporarily disregard weak economic data and ongoing worries about China's crucial property sector, which is the top consumer of the metal, according to a Reuters report.

Copper prices experienced a volatile session on Friday, initially soaring to an unprecedented record high of $11,952 per metric ton on the London Metal Exchange (LME).

Friday's volatility: "AI bubble" reversal

This sharp upward movement was primarily driven by persistent, escalating concerns regarding the tightening global supply of the industrial metal, often dubbed 'Dr. Copper’ for its role as an economic barometer.

Growing demand from the energy transition sector—specifically electric vehicles, charging infrastructure, and renewable energy grids—coupled with ongoing production challenges and dwindling inventories, created a powerful bullish momentum.

However, the rally was quickly curtailed, leading to a significant and sudden sell-off later in the day.

This reversal was fueled by a broader market shift and renewed anxieties surrounding the potential bursting of the so-called "AI bubble."

Investors started to take profits and reassess risk exposure, particularly in assets that have seen substantial gains based on future technological optimism.

The retreat was indicative of heightened market sensitivity to systemic risks, where exuberance over technological advancements like artificial intelligence is being tempered by caution over potentially overheated valuations across various sectors, including raw materials critical for that technology.

“With the interest rate cut materialising and macro tailwinds fading, coupled with increased market concerns about an AI tech bubble, copper prices came under pressure and closed lower on Friday,” Neil Welsh, head of metals at FCA-regulated multi-asset brokerage Britannia Global Markets, said in an emailed commentary.

The industrial metal experienced a 1.5% jump, rebounding from a 3% plunge in the preceding session.

This earlier drop was fueled by a selloff in artificial intelligence-related shares, which had raised concerns regarding the metal's demand in sectors like electrical wiring and renewable energy equipment.

Market mechanics and tighter 2026 outlook

Ahead of Wednesday's settlement, traders reported that short or bearish positions on the LME were being reduced or rolled over.

Furthermore, approximately 39% of the 165,875 tons of copper held in LME-registered warehouses was designated for delivery.

Inflows to the COMEX copper stocks continued daily, pushing the already record high even further, a trend linked to rising Comex prices.

Although the US implemented 50% import tariffs in August, refined copper was exempted, but it remains under review.

"As long as there is a significant arbitrage between the LME and CME, I expect to see material still flow into the US as traders capture those profits," Samuel Basi, founder of Perfectly Hedged, a risk management and trading consultancy, told Reuters.

Meanwhile, factory output growth in China, the world's leading metals consumer, decreased to a 15-month low in November, according to new data.

Additionally, the data revealed a continued decline in new home prices.

Concerns over China's property market intensified after developer Vanke sought fresh support from bondholders to manage an upcoming onshore debt repayment.

At the time of writing, the three-month LME copper contract was at $11,730.45 per ton, up 1.4% from the previous close.