Copper price falls as LME trade halt caps turbulent week for metals

Copper sank from a record toward the end of an extraordinary week for metals marked by frenzied trading, huge gains and — in a late twist — a one-hour delay to the opening of the London Metal Exchange.

The world’s biggest metals bourse opened belatedly at 10:00 a.m Hong Kong time on Friday after standard pre-trading checks identified a potential technical issue, and the exchange ordered a precautionary delay. That made for a nervy start to business as market participants in Asia speculated over who might be sitting on losses after huge price moves on Thursday.

Following the delayed start, benchmark three-month futures fell by almost 4% to near $13,000 a ton on the LME, after peaking above $14,500 on Thursday, driven by a sudden wave of buying by Chinese speculative investors with few precedents. The end-of-week drop came as mainland buyers pulled back, other commodities including gold sank, and the US currency rose.

Prices were down 1.4% in the run-up to the start of US trading, tracking gyrations in the dollar as markets digested President Donald Trump’s appointment of Kevin Warsh as the next chair of the Federal Reserve.

Copper has been at the heart of a remarkable period of trading, fueled by optimism over demand from the energy transition, as well as a steadily weaker US dollar, which hit a four-year low earlier this week. Some investors have been caught up in a bid for hard assets that swept through precious metals in January, including gold. Still, banks including Citigroup Inc. have said manufacturing demand can’t justify recent gains for industrial commodities.

“Many traders feel that the current market behavior has overturned their trading experience and strategies,” said Zhou Zhentin, a trader at KS Commodities Co. “It’s forcing everyone who used to study traditional nonferrous trading to switch toward studying gold, AI and geopolitics.”

The rush into copper — as well as other base metals — lifted the catch-all LMEX Index to a record on Thursday, topping the peak that was set in 2022. Copper — a mainstay metal for wiring and batteries — has been in focus in recent quarters amid mine snarls, concerns about possible US import levies, and the outlook for demand given the global push for electrification.

The copper market is likely to “push back physically” against soaring prices, Citigroup analysts wrote in a note, flagging potential for greater scrap supply and so-called demand destruction that would eventually become a headwind. The bank held its forecast for average prices this year at $13,000 a ton.

At the same time, some metrics suggest that near-term conditions are not tight. The spread between copper’s cash price and three-month futures is more than $90 a ton in contango, a bearish pattern.

On Friday, the price drop was driven both by profit-taking, as well as from gains in the US dollar as investors zeroed in on the likely path for US monetary policy as Bloomberg reported that the White House was preparing to appoint Warsh as chair of the Fed.

If confirmed by the Senate, the former Fed governor will take charge of US monetary policy at a time when many economists and investors see its traditional insulation from elected officials as being under threat from the White House. Warsh aligned himself with the president in 2025 by arguing publicly for lower interest rates, going against his longstanding reputation as an inflation hawk.

Copper traded at $13,424.50 a ton by 12:46 p.m. in London, trimming its rise for this month to about 8%. The biggest gainer on the LME in January remains tin, with an advance of nearly 30%.

‘Too uniform’

“The market’s expectations have become too uniform at this stage and need some adjustment,” said Jerry Zhang, a trader at Ningbo Meishan Bonded Port Hongyi Investment Management Partnership Co. “Volatility has also become quite high, so we prefer to control risk and avoid participating too much.”

The earlier pause in trading on the LME was less severe than some other recent disruptions. A major data-center malfunction took down markets operated by CME Group Inc. for more than 10 hours in December, halting trading across equities, foreign exchange, bonds and commodities.

But continuity has been a major focus for the LME since 2022, when a crisis in the nickel market triggered by a massive short squeeze led to some trades being declared void. That episode prompted an overhaul of regulations.

Citigroup’s note — ahead of the open on Friday — flagged that while copper may rally further in the near term, underlying demand would be a challenge.

“We are beyond pricing on supply-and-demand dynamics in this environment, and like gold and silver it is hard to put a ceiling on where prices can go if investment capital continues to flow into the space,” they wrote. At the same time, “our base case is an intensifying physical market pushback,” they said.

Read More: Goldman warns base metals rally at risk on weak Chinese demand