Copper prices rallied to a record high of over $13,000 per ton last month, but retreated to about $12,700 this week as expectations of long-term demand strength collided with massive stockpiling at the key exchange hubs in the U.S. and China.
Despite an unchanged outlook of soaring copper demand in the long term due to electrification and surging power consumption, near-term prospects in the copper market appear more fragile than the gold rally.
“While we expect long-term gold prices to rise further, we see more differentiated returns across the broader commodity space in the base case,” analysts at Goldman Sachs wrote in a recent note carried by the South China Morning Post.
In copper markets, the near-term outlook points to oversupply, which has tempered the price increase, analysts say.
“Rising visible inventories, softer pre?holiday demand in China, and a cash?to?three?month contango in London signal ample near?term supply, offsetting copper’s appeal as a long?term investment theme driven by electrification, AI data?centre power demand, electric vehicles, and cooling infrastructure,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in an analysis last week.
“While the longer?term narrative remains supportive, near?term upside may stay capped until post?holiday demand signals re?emerge.”
Chinese markets have been closed for more than a week until February 23 due to the Lunar New Year, around which demand typically weakens and metals exchanges cannot influence global prices as they did in the past few weeks.
At the end of 2025 and the start of 2026, speculators held record-high open interest in the base metals copper, zinc, nickel, tin, lead, and aluminum traded on the Shanghai Futures Exchange.
Traders have been betting record amounts of money on China’s metals markets, expecting a continued rally in the prices of base metals and lithium. A large part of the speculative longs came from retail investors, and the metals mania gripped global markets, too.
Fundamentals in metals markets still matter, but the outsized positioning and the momentum have more prominent roles and lead to spikes to record-highs and subsequent violent corrections, according to analysts.
In addition, China has become the center of short-term price formation in metals, ING commodities strategist Ewa Manthey said in a note earlier this month.
“Fundamentals still matter but this shift means that positioning and momentum play a bigger role, leading to more volatility,” the strategist added.
