Copper tops $14,000 mark as speculation, mine disruptions fuel metals surge

On Thursday, benchmark copper on the London Metal Exchange soared to a record high, surpassing $14,000 per metric ton. 

The copper surge was primarily driven by speculation, following mine disruptions that could potentially lead to supply shortages.

Fueled by aggressive speculative buying from bulls in China, copper surged to a new record, climbing past $14,531.70 per ton in its largest single-day gain in years. 

At the time of writing, the three-month copper contract on LME was at $14,354.33 per ton, up a whopping 9.4% from the previous close. 

This significant investor interest is driving capital into base metals, stemming from optimistic forecasts for stronger economic expansion in the US and increased worldwide investment in critical areas like data centers, robotics, and power infrastructure, according to Neil Welsh, head of metals at Britannia Global Markets.

Copper’s unprecedented surge

A weaker dollar makes commodities priced in the greenback cheaper for overseas buyers. 

Copper's price surged last year, rising 42%, and has continued to climb, gaining another 12% in January. 

The metal is a key indicator of the global economy, as it is widely used in power, construction, and increasingly in data centers for AI and the global clean energy transition. 

However, some investors are concerned about a potential dip in industrial demand.

Copper's increase is partly attributed to a broader interest in hard assets, which has pushed gold and silver to record highs, with traders citing geopolitical tensions as a contributing factor. 

This rise occurred even as physical spot demand weakened in China, the largest consumer market. 

Evidence of this weak demand is the Yangshan copper premium, a measure of Chinese appetite for imported copper, which dropped to $20 a ton on Wednesday, its lowest point since July 2024 and significantly down from $55 in December.

Aluminium jumps

Aluminium prices have soared, climbing 27% in the last six months to reach their highest level since April 2022. This metal is widely utilised across various sectors, including transport, construction, and packaging.

A wider metals rally, fueled by a weaker US dollar and increasingly constrained supply, is the backdrop for this latest price surge in aluminium. 

Shanghai prices saw a significant jump of nearly 6%, while London prices climbed close to 2%.

China, the world's leading producer, is under scrutiny because its output last year reached the government-mandated annual limit of 45 million tons.

The aluminium market is projected to enter a deficit in 2026, primarily due to ongoing supply limitations. Production expansion remains sluggish globally, with the notable exception of Indonesia. 

“China continues to show discipline on capacity additions, and neither Europe nor the US is seeing meaningful smelter restarts,” Ewa Manthey, commodities strategist at ING Group, said in a note.

At the time of writing, the three-month aluminium contract was at $3,322.50 per ton, up 1.6% from the previous. Prices had risen to $3,355.35 per ton, a level not seen since 2022.