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 price points. This rebound was further bolstered by a softening U.S. dollar and a surge in global risk appetite driven by optimism in the technology sector.

Copper Recovers Following Steep Sell-off

After enduring a sharp decline of more than 4% during the previous two trading sessions, the London Metal Exchange (LME) benchmark three-month copper price climbed 1.1% to reach $13,233 per metric ton. This recovery is largely attributed to "bargain hunting," where investors step in to buy assets after significant price drops.

According to Ewa Manthey, commodities strategist at ING, the recovery is being supported by a combination of a softer dollar and improved risk appetite across financial markets. This sentiment was particularly evident as global stocks surged, fueled by strong earnings and optimistic forecasts from semiconductor giants Micron and Qualcomm, which reignited the ongoing Artificial Intelligence (AI) rally.

The Role of the U.S. Dollar and Interest Rate Outlook

A crucial driver for the metal's rebound is the movement of the U.S. dollar index. A slightly weaker dollar makes commodities—which are priced in U.S. currency—more affordable for international buyers using other currencies.

However, the macroeconomic environment remains complex. While the dollar hit a 13-month peak on Wednesday, investors are closely monitoring upcoming U.S. inflation data. There is a growing belief that interest rates may be hiked at least once this year. Manthey noted that the broader macro backdrop remains challenging, as "higher-for-longer" U.S. rate expectations continue to weigh on industrial metals.

Performance Across Other Key Industrial Metals

The positive sentiment was not limited to copper, as several other metals saw gains:

  • Aluminium: LME aluminium rose 0.8% to $3,148 a ton. This follows a period where it had lost gains related to energy concerns following the Iran war. Analysts at Sucden Financial noted that the market has rapidly repriced as the narrative shifted from supply disruption to normalization. Conversely, the most-traded aluminium contract on the Shanghai Futures Exchange shed 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 movement comes amid speculation regarding production quotas in Indonesia, the world's top producer, which has not yet decided its nickel production quota for 2026.
  • Other Metals: LME zinc rose 0.3% to $3,432 a ton, lead added 0.4% to $1,921, and tin advanced 1.1% to $50,245.

Key Takeaways

  • Copper Rebound: Copper rose 1.1% to $13,233 per ton, driven by bargain hunting after a 4% drop in previous sessions.
  • Market Drivers: Improved risk appetite from the AI-driven tech rally and a softening U.S. dollar provided essential support for metal prices.
  • Macroeconomic Headwinds: Despite the recovery, high interest rate expectations in the U.S. remain a significant pressure point for industrial metals.