Copper Prices Hit Lowest Since July as Strong Chinese Demand Cushions Decline

Copper prices sagged to their lowest point since late July on Friday, caught in a crosscurrent of political realignments in Washington and a cooling tech sector. Yet beneath the paper sell-off lies a stark paradox: while financial markets retreat, physical supplies of the red metal remain at historic bottlenecks.

On the London Metal Exchange (LME), three-month copper futures dropped as much as 1.5% to near $13,600 per metric ton, wrapping up a weekly loss of nearly 3%. The slide reflects shifting macroeconomic expectations and policy recalibrations following the U.S. midterm elections.

Shifting Washington Priorities Shrink Tariff Premiums

The primary macro trigger for the retreat stems from Capitol Hill. Democratic control of Congress has sharply dialed back expectations for aggressive import tariffs on industrial metals—a key factor that had previously inflated U.S. copper prices far above global benchmarks.

With affordability taking center stage ahead of the 2028 political cycle, traders are rapidly unwinding the "tariff premium." As the price gap between U.S. and overseas exchanges closes, physical metal that was once diverted toward American ports may now flow back into international markets, easing availability abroad.

• Pressure on paper contracts has been compounded by a sell-off across tech stocks, driven by growing speculation around stricter AI governance.
• Data centers and AI power grids have become cornerstone drivers of global copper consumption.
• Friction in project rollouts ripples quickly through metals trading.
• Market analysts say AI projects are unlikely to face outright cancellations.
• Heightened regulatory scrutiny brings longer permitting processes, escalating development costs and extended timelines.
• Broader financial tightening continues to weigh on these cyclical industrial assets.

Record Physical Premiums Provide a Floor

In sharp contrast to the bearish sentiment trading on paper, the physical market remains extraordinarily tight. Supply chain bottlenecks, mine output cuts, and shrinking Asian stockpiles continue to restrict actual deliveries. In China, physical copper spot premiums broke historical records, surging past 2,500 yuan per metric ton—the highest level recorded since tracking began in 2015.

This deep gap between paper-market skepticism and physical scarcity suggests that real-world demand could soon cap further downside losses.