Key Moments
- Copper prices reversed earlier gains as attention shifted back to weakening demand signals.
- London Metal Exchange inventories in Asia increased, while traders moved additional African spot cargoes into China.
- The China Nonferrous Metals Industry Association projected about a 5 per cent rise in refined copper output this year after a 10 per cent increase the year before.
Softening Demand Weighs on Copper Prices
Copper prices pulled back after a brief advance, as the market refocused on indications of weakening demand. Analysts at ANZ highlighted that signs of softer consumption were again driving sentiment.
On Wednesday, new evidence of this trend appeared as inventories in London Metal Exchange warehouses across Asia climbed. The build-up in stockpiles pointed to the possibility of further supply availability, reinforcing the cautious tone in the market.
Arbitrage Flows Into China
Traders took advantage of a short-lived arbitrage opportunity last week, redirecting additional spot shipments from Africa into China. The flows were encouraged by a sharp rise in Shanghai copper futures that exceeded the gains seen in London benchmark prices, making such movements temporarily attractive.
| Factor | Market Impact |
|---|---|
| Rising LME warehouse inventories in Asia | Signals ample supply and soft demand |
| Arbitrage-driven African spot cargoes into China | Increases near-term availability in Chinese market |
| Forecast growth in China’s refined copper output | Adds to bearish sentiment despite reserve build calls |
China Output Forecast Undermines Bullish Reserve Narrative
Sentiment turned more negative as the China Nonferrous Metals Industry Association projected that the country’s refined copper production would grow by roughly 5 per cent this year. This follows a 10 per cent jump in output the previous year, intensifying concerns about abundant supply.
The outlook for increased production has cooled investor enthusiasm and overshadowed the initial optimism that followed calls for larger strategic holdings of the metal.
Strategic Reserve Calls Spark Brief Price Rally
Earlier in the period described, copper prices rallied for a short time after a state-owned industry group urged authorities to expand strategic reserves of copper and encouraged Chinese manufacturers to increase their commercial inventories. Those proposals temporarily lifted prices as the market considered the potential for additional state and corporate buying.
The article noted that this recommendation resembled moves by the Trump administration, which “unveiled plans to establish its own critical minerals strategic reserve, supported by a $US10 billion fund aimed at procuring and storing minerals for various manufacturers.”
Role of the China Nonferrous Metals Industry Association
The China Nonferrous Metals Industry Association is described as an organization focused on the nonferrous metals industry in China. Its objectives include promoting the development and coordination of the sector and offering guidance and support to its members.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
