Copper slips on concerns over AI demand, high US inventories
LONDON: Copper prices eased on Thursday after touching a two-week high in the previous session as investors stayed on the sidelines, wary about demand from the AI sector and high US inventories. Three-month copper on the London Metal Exchange was down 0.9% at $14,352 a metric ton by 1040 GMT, after hitting its highest since October 14 on Wednesday. “Sentiment has turned relatively more cautious…
Copper prices declined on Thursday, after peaking at a two-week high on the previous day, as traders remained uncertain about demand from the artificial intelligence sector and the high inventories in the United States. The three-month copper price on the London Metal Exchange fell 0.9% to $14,352 a metric ton by 10:40 GMT, following its highest level since October 14.
Analyst Patrick Jones from JP Morgan stated that market sentiment had shifted to a more cautious stance rather than a bearish outlook. In September, copper prices surged to a record high of $14,875 due to expectations that the rush to build AI data centers would increase demand for copper. Shares of Alphabet, the parent company of Google, dropped in after-hours trading on Wednesday following a significant increase in cash burn as the company invested heavily in AI development.
Copper, which is widely utilized in construction and power, has also been boosted by substantial shipments to the US, anticipating potential tariffs that could create shortages in other regions. Inventories in US warehouses linked to the Comex exchange have increased by 60% this year, reaching 800,321 short tons or 726,039 metric tons.
Market participants view the primary downside risk as the lack of US tariff action, which would weaken the US import advantage and restore pricing power to Chinese consumers, according to Jones. The most-traded copper contract on the Shanghai Futures Exchange decreased by 0.4% to close at 109,380 yuan ($16,408.64) a ton. China's supply remained constrained, as indicated by the surge in copper premiums.
The Yangshan copper premium, a measure of Chinese consumers' interest in imported units, reached $205 a ton on Wednesday, the highest level in over a decade. On the London Metal Exchange, LME zinc extended gains with an increase of 0.8% to $3,893 a ton, its highest in more than a month. Other metals, including LME aluminium, tin, lead, and nickel, experienced slight declines, closing at $3,066 a ton, $50,195, $1,908, and $15,600, respectively.
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