Copper prices on the London Metal Exchange (LME) have retreated, falling around 1% this morning and reversing part of Monday’s rally, which was triggered by President Trump’s announcement of a temporary pause in planned US strikes on Iran’s energy infrastructure [1]. The renewed decline in copper prices followed Tehran’s denial of any ongoing negotiations, which weighed on market sentiment [1]. Despite the roughly 10% drop in copper prices over the month, the pullback has attracted renewed Chinese buying interest [1].
According to Mysteel data, copper inventories fell by 78,700 tonnes last week to 486,200 tonnes, marking the largest weekly inventory draw of the year [1]. This significant reduction in inventories highlights improving physical offtake in the wake of the recent price correction [1]. ING strategists Ewa Manthey and Warren Patterson note that the renewed Chinese demand is a key factor supporting the market following the price decline [1].
While the immediate market reaction has been negative due to geopolitical uncertainties and Tehran’s denial of negotiations, the substantial inventory draw and increased Chinese buying suggest underlying support for copper prices as physical demand improves [1].
CONCLUSION
Copper prices have declined amid geopolitical tensions, but the drop has spurred strong Chinese buying, resulting in the largest weekly inventory draw of the year. This renewed demand may provide support for copper prices going forward, despite recent negative sentiment.