Copper Prices Rebound as Bargain Hunting and Softer Dollar Drive Recovery

Copper prices staged a significant recovery on Thursday, snapping a two-day losing streak as investors capitalized on lower entry points. A combination of bargain hunting, a weakening US dollar, and renewed optimism in global equity markets has provided much-needed support to the industrial metal.

Copper Recovers After Steep Weekly Sell-off

After enduring a brutal two-session decline where prices plummeted by more than 4%, the London Metal Exchange (LME) benchmark three-month copper price gained 1.1%. By 0915 GMT, copper was trading at $13,233 per metric ton.

Market analysts, including Ewa Manthey from ING, noted that the recovery is primarily driven by investors swooping in on attractive prices following the recent sell-off. This rebound is being further fueled by a broader improvement in risk appetite across financial markets, which has helped lift commodity sentiment.

The Role of the US Dollar and AI-Driven Optimism

A crucial factor in the metal's recovery is the movement of the US dollar. As the dollar index hit a 13-month peak on Wednesday, subsequent softening has made commodities priced in USD more affordable for international buyers using other currencies.

Furthermore, global stock markets saw a surge, reigniting the artificial intelligence (AI) rally following strong earnings and optimistic forecasts from semiconductor giants like Micron and Qualcomm. This renewed enthusiasm for tech-driven growth has indirectly boosted the appetite for industrial metals. However, caution remains; expectations of "higher-for-longer" US interest rates continue to pose a structural challenge to the industrial metals sector.

The rally was not limited to copper, though other metals showed mixed performance:

  • Aluminium: LME aluminium rose 0.8% to $3,148 a ton. This follows a period where the metal had surrendered all gains made during the initial stages of the Iran conflict, as the market narrative shifted from supply disruption to normalization. Conversely, the Shanghai Futures Exchange saw aluminium shed 2.6%, closing daytime trading at 22,865 yuan ($3,360.82) per ton.
  • Nickel: LME nickel edged up 0.3% to $16,860 a ton. This movement comes amid market speculation regarding production quotas in Indonesia, the world's top producer, which has yet to finalize its 2026 production caps.
  • Other Metals: Zinc rose 0.3% to $3,432 a ton, lead added 0.4% to $1,921, and tin advanced by 1.1% to reach $50,245.

Key Takeaways

  • Copper Recovery: Copper climbed 1.1% to $13,233 per ton, rebounding from a recent 4% drop due to bargain hunting and a weaker dollar.
  • Macroeconomic Drivers: While AI-led equity optimism is helping, the "higher-for-longer" US interest rate environment remains a significant headwind for industrial metals.
  • Mixed Metal Sentiment: While copper and nickel saw gains, aluminium experienced a divergence between the LME (up 0.8%) and the Shanghai Futures Exchange (down 2.6%).