China Is Running Low on Copper. So Why Are Prices Falling?
Copper prices have fallen to their weakest level since July. The futures market is pricing in AI fears and a hawkish Federal Reserve, but the physical market is pointing the other way.
Benchmark three-month copper on the London Metal Exchange (LME) fell to $13,515 per ton on Thursday. An early rebound on Friday faded, leaving the metal about 9% below September’s record of $14,875.
Why Paper Prices Are Falling
The selling has come from financial markets, not from a surplus of metal. Copper has been trading as a proxy for AI infrastructure, and the latest tech selloff dragged it lower. News that Nvidia CEO Jensen Huang is stepping down added to doubts about data-centre spending.
“Every time AI takes a hit, copper demand and prices come under pressure too,” said Tom Price, analyst at Panmure Liberum.
Monetary policy is adding pressure. A hotter-than-expected US inflation print revived bets on rate hikes, and Fed officials have not ruled out a 50-basis-point hike at the December 8–9 meeting. The stronger dollar triggered selling by model-driven funds.
Meanwhile, Deutsche Bank sees lower odds of US tariffs on refined copper, which is unwinding the trade that had pulled metal into the US.
The Physical Market Tells a Different Story
China’s market is moving the opposite way. Shanghai Futures Exchange (SHFE) warehouse stocks fell 24% in one week to 33,848 tons, the lowest in almost three years and less than one day of Chinese consumption. The Yangshan premium, which tracks China’s demand for imported copper, hit a record $240 per ton on Thursday.
Jimmy McGeoch of Goldman Sachs described the physical market as “tight as a drum,” according to Robert Ivanhoe. Ivanhoe pointed to record-low smelter processing fees, Chinese smelter production cuts, and new grid tenders from China’s major grid operators. He warned that Chinese inventories could be depleted by year-end.
The Yangshan Copper Premium hits another all-time high… as Jimmy McGeoch at @GoldmanSachs said this morning, 'the physical copper market is tight as a drum'.
— Robert Friedland (@robert_ivanhoe) November 10, 2026
We are hearing that China’s refined copper market will continue to tighten at least through the end of the year,… https://t.co/fpVd1iOfD6 pic.twitter.com/g1HTKCngHF
According to Daniel Ghali of Deutsche Bank, copper bears need a recessionary spiral, while bulls only need the status quo to hold.
Copper Price Chart Shows Real Technical Damage
The technical damage is real even if the sell-off is happening on paper. On the daily chart (USD per pound), copper lost its rising support trend line in late October, and the line acted as resistance when price retested it on October 30.
On Thursday, copper closed below its 200-day moving average for the first time since this rally began. The same line held the March 23 swing low. The breakdown also took out the 0.382 Fibonacci retracement at $6.31 and a horizontal support zone. Price is now near $6.21, about 10.7% below the September high, and has printed its first lower low in months.
The next support is the 0.5 Fibonacci level at $6.11. Below it, the 0.618 retracement at $5.91 lines up with long-term support, about 4.8% below current prices.
The RSI sits near 35 and is falling, so copper isn’t oversold yet. Volume has eased since the November 4 and 9 selloffs, but the price keeps falling as sellers press on.
The selloff may be a paper one, but losing the 200-day average could invite more systematic selling. The December Fed meeting and China’s import premiums will show which side wins.