Copper price retreats from five-month high as traders weigh China outlook

[Ben Graham]

Copper prices pulled back on Wednesday after briefly touching their highest levels since late March in London, as traders balanced concerns over supply with an uncertain demand picture from China.

On the London Metal Exchange, copper climbed as much as 0.6% to $10,038 a tonne before easing 0.1% to $9,967 by 11:22 a.m. Shanghai time. The red metal gained 3% in August and remains up about 14% so far this year.

In the US, COMEX futures were steady, with the most-active contract slipping 0.14% to $4.638 per pound ($10,203/t) on Wednesday morning.

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China concerns

A weaker US dollar and the prospect of interest rate cuts have underpinned prices in recent weeks. But the market remains focused on China where signs of slowing industrial activity are raising doubts about demand.

China’s official factory gauge for August pointed to a rapid contraction amid subdued demand, while analysts including Goldman Sachs have flagged softer conditions in the second half of the year.

Still, some observers are more optimistic. Higher import premiums, relatively low inventories for this time of year, and potential supply constraints are lending support. Several Chinese smelters are scheduled to undergo maintenance in September, according to Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co.

“With reduced supply and stable demand, inventory levels are expected to decrease, which will support upward price moves,” Jia said in a text message.

Market recovery

Copper has staged a strong recovery after earlier turbulence linked to global trade tensions. Inflows of material to the US ahead of tariffs have tightened supplies elsewhere, keeping US futures at a premium over LME prices.

The market now faces a tug of war between supportive supply-side dynamics and uncertainty over whether China’s economic slowdown will curb demand growth through the remainder of 2025.

(With files from Bloomberg)