Copper falls, set for worst week since March on AI rout

Copper prices fell on Friday, setting the stage for the largest weekly decline in London since March, as technology stocks experienced a sharp decline. The benchmark three-month copper on the London Metal Exchange decreased by 0.61%, trading at $13,759 per metric ton at 0300 GMT. This projected a 2.79% drop for the week. The most actively traded copper contract on the Shanghai Futures Exchange decreased by 0.93%, reaching 107,000 yuan ($16,046.79) per ton.

Market analysts like Craig Lang from CRU point to worries over AI investment as a key factor influencing copper prices, as copper becomes more sensitive to "sentiment towards data center expansion." Asian tech-heavy markets suffered on Friday following the US Nasdaq Composite's steepest one-day decline in 19 months on Thursday. The election of Democratic candidates in the US midterms has raised concerns about potential regulatory oversight that could curb AI development.

However, supply constraints have somewhat mitigated the copper price decline. CRU analyst Craig Lang advises caution in labeling this a sustained correction, given ongoing mine supply challenges and restricted metal availability outside the US. The Yangshan copper premium, an indicator of demand for copper imports in China, surged to $210 a ton on Thursday, marking its highest point since Shanghai Metal Markets started tracking it in 2012.

Warehouse inventories outside the US have also been reduced as copper is moved into the country ahead of potential tariffs on refined copper imports. The LME metals experienced varying changes, with aluminum falling 0.13%, zinc losing 0.5%, lead decreasing by 0.11%, nickel dropping 0.41%, and tin gaining 1.1%. On the SHFE, aluminum edged up by 0.11%, while zinc declined 0.96%, lead advanced 0.72%, nickel surged 2.04%, and tin slipped 3.18%.