Copper Price Erupts Past $14,000 on Speculative Frenzy

Copper prices have exploded past US$14,000 (RM55,062) a ton, marking the metal's largest single-day surge in years. The rally is being fueled by a wave of speculative buying, with traders in China leading the charge.

Investors, particularly on the Shanghai Futures Exchange (SHFE), are aggressively buying into base metals. This is driven by expectations for stronger U.S. economic growth and a global surge in spending on data centers, robotics, and power infrastructure. The buying pressure from Asia has pushed global benchmarks to new heights, with copper on the London Metal Exchange (LME) leaping as much as 7.9% to an all-time high of US$14,125 a ton.

Figure 1: London Metal Exchange copper prices surged from late 2025 into January 2026, breaking previous records as speculative interest intensified.

By 1:56 p.m. Shanghai time, LME copper had pared some gains but was still up 6.5% at US$13,930 a ton, its biggest one-day jump since 2009. Meanwhile, SHFE copper futures surged 6.7% to 109,990 yuan (US$15,832 or RM62,007.05) a ton.

Shanghai Trading Volume Hits Unprecedented Levels

The epicenter of this rally appears to be the Shanghai bourse, where trading volumes have skyrocketed since late last year, making January the busiest month on record. Activity intensified on Thursday as bullish investors reacted to the latest Federal Reserve meeting and growing optimism around spending related to artificial intelligence.

"This is all driven by speculative funds," said Yan Weijun, head of nonferrous metals research at Chinese trader Xiamen C&D Inc. "It's likely all Chinese money given the surge is in Asian hours."

The rally wasn't confined to copper. Other industrial metals also climbed, with aluminum rising 2% and zinc gaining 3% in London. Iron ore futures on the Singapore exchange rallied over 2% after Chinese media reported that regulators no longer require property developers to submit a key set of metrics.

Macro Headwinds and the Weaker Dollar

The surge in commodities comes amid a favorable macroeconomic backdrop. A sinking U.S. dollar, which has fallen to its lowest level in over four years, makes commodities priced in the currency more attractive to international buyers. President Trump has signaled he is unconcerned by the dollar's weakness.

This environment, combined with rising demand for physical assets and elevated geopolitical tensions under the Trump administration's more assertive foreign policy, has created a perfect storm for commodities. Beyond copper, which is critical for the energy transition, precious metals have also reached all-time highs. Even crude oil has rebounded in recent weeks, shaking off last year's concerns about a global supply glut.

Federal Reserve Chair Jerome Powell also contributed to market sentiment, noting a "clear improvement" in the U.S. economic outlook as the central bank held borrowing costs steady on Wednesday. With his tenure ending in June, markets anticipate that President Donald Trump may be in a better position to push for lower interest rates.

AI and Infrastructure Spending Fuel the Narrative

Investors are increasingly targeting metals essential for major growth sectors. The narrative is heavily influenced by anticipated spending on technology and infrastructure.

"Under the cycle in which the US maintains interest rate cuts, the expectation for upward movement in copper prices has not changed," noted Chi Kai, chief investment officer at Shanghai Cosine Capital Management Partnership. "As for how high prices can rise, there is no clear expectation as long as the US continues to push AI, chips and power construction."

This investment thesis was underscored by Tesla Inc.'s plan to shift US$20 billion in resources toward robotics and AI this year—a move that directly benefits key metals like copper, aluminum, and tin.

A Reality Check: Has the Rally Outpaced Demand?

Despite the powerful rally, some analysts warn that the gains may have run ahead of fundamentals. Goldman Sachs Group Inc.'s co-head of China equities, Trina Chen, told Bloomberg TV on Wednesday that a "technical adjustment" is likely on the horizon.

The concern is that the speculative price surge has detached from real-world physical demand, particularly as buyers in China may start to balk at the higher costs. This suggests that while momentum is strong, the market could be vulnerable to a correction.