According to TD Securities’ commodity team, copper is currently experiencing significant selling pressure from Commodity Trading Advisors (CTAs), as market participants shift their focus away from supply risks associated with the Strait of Hormuz and instead concentrate on macroeconomic and demand-side weaknesses [1]. The team notes that while an upcoming US tariff decision could provide temporary support for copper prices, there are clear signs of deteriorating demand, particularly highlighted by softening Chinese physical premiums and rising commercial inventories [1].
TD Securities reports that CTAs are not only selling copper but are also large-scale sellers of zinc and nickel, with aluminum seeing additional marginal selling [1]. The market's attention has moved past supply risks, making base metals more sensitive to any indications of weakening macroeconomic conditions or demand [1]. For copper specifically, the uncertainty surrounding next week's US tariff decision is expected to keep prices supported in the short term, but the ongoing decline in Chinese physical premiums continues to signal weaker demand [1].
While inventories on the Shanghai Futures Exchange (SHFE) are falling, commercial inventories in China are beginning to rise due to ample supply from smelters and softer demand [1]. TD Securities further notes that copper prices would need to drop to $13,000 per ton before triggering additional systematic selling by CTAs [1].
CONCLUSION
TD Securities highlights that while the upcoming US tariff decision may offer short-term price support for copper, weakening demand indicators—especially in China—pose significant downside risks. The market remains cautious, with systematic selling likely to intensify only if prices fall to $13,000 per ton.