Copper’s Wild Week Ends With A Retreat As Frenzy In China Ebbs

Copper sank from a record at the tail-end of a extraordinarily volatile week, with trading marred by an early glitch on the London Metal Exchange, as Chinese investors pulled back and the US dollar rose.

Benchmark three-month futures dropped almost 4% to near $13,000 a ton on the LME, after peaking above $14,500 on Thursday. Still, copper remains on course for a small weekly gain, the sixth in the past seven.

With global investors focused on metals after a series of major price swings in commodities, the LME — the trading venue that has set global prices for base metals for more than a century — suffered a one-hour delay to the start of trade on due to technical issues.

Copper has surged in the opening weeks of the new year, caught up in a wave of enthusiasm for base and precious metals that's been especially evident in China, Asia's largest economy and the leading consumer. The frenzy has been supercharged by optimism about demand given the energy transition, as well as a steady weakening in the US dollar, which hit a four-year low.

"The market's expectations have become too uniform at this stage and need some adjustment," said Jerry Zhang, a trader at Ningbo Meishan Bonded Port Hongyi Investment Management Partnership Co. "Volatility has also become quite high, so we prefer to control risk and avoid participating too much."

The US dollar rose on Friday — making commodities less attractive for many investors — amid speculation that the Trump administration is preparing for the president to nominate Kevin Warsh to be the next Federal Reserve chair.

Copper traded 2.4% lower at $13,295.50 a ton on the LME at 11:41 a.m. in Singapore.

Source: Bloomberg