Background on Copper and its Significance
Copper, a crucial metal in the global economy, plays an essential role in various industries such as construction, electrical equipment, and transportation. Its recent surge in price highlights the ongoing tension between supply and demand, as well as geopolitical factors influencing commodity markets.
Copper Reaches All-Time High in Shanghai
On Friday, copper prices reached an all-time high in Shanghai due to concerns about the continued scarcity of raw materials and China’s plans to curb copper projects to control excessive expansion.
The most active copper contract on the Shanghai Futures Exchange (SHFE) closed the day up by 3.6%, reaching 98,720 yuan (approximately $14,083.34) per tonne, marking a new high of 99,730 yuan earlier in the session.
The contract is on track for a weekly gain close to 6%, following the London reference’s peak of $12,282 on Wednesday.
China’s Efforts to Control Copper and Aluminum Projects
China’s top economic planner announced on Friday that the country will strengthen oversight of new copper and aluminum projects to curb irrational investment and uncontrolled expansion from 2026 to 2030.
Major Chinese copper smelters refrained from setting processing fee guidelines for copper concentrates in the first quarter of 2026, according to sources. This marks the fourth consecutive quarter they have declined to do so, as raw material scarcity pushes charges to historical lows.
Anticipation of Further US Interest Rate Cuts
Investors expect two more interest rate cuts from the US next year, which will likely keep the dollar weak. The US dollar hit a two-month low on Wednesday, making metals priced in USD more attractive to holders of other currencies.
Impact on Other Base Metals
In addition to copper, other base metals on the SHFE also experienced price increases:
- Aluminum rose by 1.1%
- Lead gained 1.7%
- Zinc improved by 0.7%
- Nickel advanced by 1.3%
- Tin added 1.4%
Key Questions and Answers
- What is copper and why is its price surge significant? Copper is a vital metal used in numerous industries, including construction and electrical equipment. Its recent price increase reflects concerns about supply shortages and geopolitical factors affecting commodity markets.
- What are China’s plans regarding copper projects? China intends to strengthen oversight of new copper and aluminum projects to curb irrational investment and uncontrolled expansion from 2026 to 2030.
- How do US interest rate expectations influence copper prices? Investors anticipate two more US interest rate cuts in the coming year, which is expected to keep the dollar weak. A weaker dollar makes metals priced in USD more attractive to holders of other currencies.
- Which other base metals experienced price increases alongside copper? Aluminum, lead, zinc, nickel, and tin all saw price increases on the SHFE alongside copper.
