Copper Slides to Four-Month Low as AI Investment Concerns Weigh

Benchmark three-month copper on the London Metal Exchange slipped to its lowest level in almost four months on Friday, and was on course for its steepest weekly decline since March, as concerns about artificial-intelligence investment and a firmer U.S. dollar weighed on sentiment. The contract was down 1.6% at $13,371.50 a metric ton as of 1700 GMT, after touching a session low of $13,358, its weakest since 17 July.

What happened

The metal was heading for a 2.9% drop this week, which would mark a fifth consecutive weekly decline and the largest weekly loss since the week ended 20 March. The slide extends a correction from September’s record near $15,000 a ton, according to ING, as investors reassessed expectations for AI-related demand.

The sell-off has not been matched by any obvious loosening in the physical market in China, the world’s largest copper consumer. Shanghai Futures Exchange warehouse stocks fell a further 18.3% this week to 27,642 tons, their lowest since December 2023. The Yangshan copper premium, paid on top of LME prices and a gauge of China’s appetite for imports, hit a record $285 a ton on Friday.

The rest of the complex was mostly lower. Aluminium was down 0.6% at $3,011 a ton after earlier hitting $2,982, its lowest since 15 October, though the premium of the cash LME contract over the three-month forward was assessed at $176.31 a ton, within a whisker of the 36-year high seen on Thursday. Zinc declined 0.3% to $3,704, nickel dropped 1.6% to $15,950 and tin shed 0.2% to $46,580. Lead was the only gainer, adding 0.4% to $1,893.50 after Shanghai inventories fell to a six-year low.

Drivers

Goldman Sachs said copper’s decline has been driven by a sell-off in AI-related equities — a sector to which copper is exposed through its use in electrification and data centres — since the Democratic victory in the U.S. midterm elections. Sentiment worsened after Nvidia chief executive Jensen Huang resigned on Thursday. The bank argued that the correction reflected positioning rather than looser copper fundamentals, pointing to limited supply in China, where inventories are low and premiums are high.

A stronger dollar added a second headwind, making dollar-priced metals more expensive for holders of other currencies. On Thursday, after copper had already fallen to a four-month low, Panmure Liberum analyst Tom Price said U.S. inflation data were forcing a repositioning in metals. “Every time AI takes a hit, copper demand and prices come under pressure too,” he added.

Policy uncertainty has also played a role. ING noted that unresolved questions over U.S. import tariffs remain in the background after the midterms, after a period in which tariff expectations had helped support prices and draw metal into the United States. Further dollar strength, the bank said, could keep copper under pressure in the near term.

What it means for buyers and producers

The gap between financial-market selling and a still-tight Chinese physical market is the practical issue for the trade. Lower LME prices may offer a better entry point for buyers who can take delivery, but record Yangshan premiums and dwindling Shanghai stocks show that getting metal into China is not getting easier. The cash-to-three-month aluminium spread also points to a shortage of nearby metal even as forward prices soften. Producers face a less supportive paper price than in September, but the physical tightness that underpinned the earlier rally has not disappeared. A stronger dollar also raises the local-currency cost of dollar-priced contracts for buyers outside the United States.

What to watch

The next test is whether Chinese inventories and import premiums ease, or whether the physical squeeze persists even if LME prices stay under pressure. Technology stocks and further guidance on U.S. rates will also matter, after Federal Reserve officials left open the possibility of a larger move at the 8–9 December meeting. A sustained dollar rally, or any sign that AI-related investment plans are being cut, would weigh further on copper.

Key figures

LME three-month copper: $13,371.50 a metric ton at 1700 GMT on Friday, down 1.6%; session low $13,358, weakest since 17 July.
Weekly move: heading for a 2.9% decline, the fifth weekly drop in a row and the steepest since the week ended 20 March.
Shanghai Futures Exchange copper stocks: 27,642 tons, down 18.3% on the week, lowest since December 2023.
Yangshan copper import premium: a record $285 a ton.
LME aluminium: $3,011 a ton; cash-to-three-month premium $176.31 a ton, close to a 36-year high.
September LME copper record: near $15,000 a ton, according to ING.