Copper Prices Bounce Back as Bargain Hunters Enter the Market

Copper prices staged a significant recovery on Thursday, reversing two days of heavy losses as investors capitalized on lower entry points. This rebound was further bolstered by a softening US dollar and a renewed sense of optimism across global financial markets.

Copper Recovers After Steep Sell-off

After enduring a punishing sell-off that saw prices drop by more than 4% over the previous two sessions, the London Metal Exchange (LME) benchmark three-month copper price gained 1.1%. By 09:15 GMT, copper reached $13,233 per metric ton.

According to Ewa Manthey, commodities strategist at ING, the recovery is a direct result of bargain hunting following the steep decline. The market sentiment was eased by a slightly weaker US dollar and an improved appetite for risk among investors. Notably, a surge in global stocks—driven by strong earnings and optimistic forecasts from semiconductor giants Micron and Qualcomm—helped reignite the ongoing AI-driven rally, providing a supportive backdrop for industrial metals.

The Role of the US Dollar and Macroeconomic Pressures

The movement in the US dollar index played a crucial role in commodity pricing. A weaker dollar makes commodities, which are priced in USD, more affordable for international buyers using other currencies. On Wednesday, the dollar index hit a 13-month peak, and investors are now closely watching upcoming U.S. inflation data.

While the immediate recovery is positive, the long-term outlook remains nuanced. There is a growing belief among investors that US interest rates may be hiked at least once this year. Manthey cautioned that the broader macroeconomic environment remains challenging, as the expectation of "higher-for-longer" interest rates continues to weigh on industrial metals more broadly.

Mixed Performance Across Other Key Metals

The recovery seen in copper was mirrored by several other metals on the LME, though the sentiment varied across different commodities:

  • Aluminium: LME aluminium rose 0.8% to $3,148 a ton. This follows a period of volatility where the market repriced assets as energy concerns shifted from disruption to normalization. However, the Shanghai Futures Exchange saw a different trend, with the most-traded aluminium contract shedding 2.6% to close at 22,865 yuan ($3,360.82) per ton.
  • Nickel: LME nickel added 0.3% to $16,860 a ton. This slight uptick comes amid speculation regarding production quotas in Indonesia, the world's top producer, which has not yet finalized its 2026 production caps.
  • Other Metals: Tin saw a notable advance of 1.1% to $50,245, while zinc rose 0.3% to $3,432 a ton, and lead added 0.4% to reach $1,921.

Key Takeaways

  • Copper prices rebounded by 1.1% to $13,233 per ton, driven by bargain hunting and a resurgence in risk appetite linked to the AI rally.
  • A softer US dollar has provided a tailwind for commodities, making them cheaper for non-USD buyers, though high interest rate expectations remain a headwind.
  • While LME metals like aluminium and nickel saw modest gains, market volatility persists due to shifting energy narratives and production speculation in Indonesia.