Copper Falls on Weak Chinese Data and Macroeconomic Headwinds

Chinese Demand Weakness

The main headwind for copper is the soft industrial performance in China, the world's largest consumer. Recent factory output and construction data suggest that stimulus measures have yet to fully translate into robust copper consumption. Traders are actively reducing exposure due to this near-term demand gap.

Supply Constraints Provide Floor

Despite the drop, the physical supply situation remains tight. Ongoing operational issues at key mines in Latin America and historically low inventories on the London Metal Exchange (LME) cap the downside. The threat of a supply squeeze continues to loom large, limiting how far prices can fall before triggering aggressive buying from end-users.

Divergence from Energy Sector

Copper is currently showing a strong divergence from the energy complex. While oil and gas prices are depressed by oversupply fears, copper benefits from the electrification supercycle—demand from Electric Vehicles (EVs), renewable energy infrastructure, and AI data centers—making it fundamentally different from traditional commodities.