Key Points:
- Copper prices rose nearly 5% after a recent 11% crash. A Chinese industry group urged the government to boost strategic copper reserves.
- Factories in China are restocking ahead of the Lunar New Year.
- Investors returned to buy the dip following a broader metals selloff.
- Immediate supplies remain ample despite the long-term bullish trend.
Copper prices bounced back on Tuesday, snapping a steep losing streak after a state-backed industry group in China urged the government to hoard more of the crucial industrial metal. The recovery comes as the broader selloff in precious metals like gold and silver began to ease, tempting buyers back into the market.
Prices on the London Metal Exchange jumped as much as 4.9% to hit $13,526 a ton. This sharp rise follows a rough week where copper plunged 11% from a record high. The turnaround began after the China Nonferrous Metals Industry Association held an annual briefing. The group explicitly called for China to expand the size of its strategic reserves and encouraged major state-owned producers to boost their commercial stockpiles as well.
Since China is the world’s largest consumer of copper, any talk of increased stockpiling is a massive signal to traders. Investors in China had already started “buying the dip” before the announcement, taking advantage of the lower prices. Additionally, manufacturers and fabricators are returning to the market to restock their warehouses ahead of the upcoming Lunar New Year holiday.
“Fabricators are willing to step in and buy when there is a correction of more than 10%,” said Li Xuezhi, a researcher at Chaos Ternary Futures Co. He noted that funds are attracted to copper because the fundamental need for the metal remains strong.
Investors have been piling into metals lately due to doubts about the strength of the U.S. dollar and a shift away from government bonds. This frenzy drove copper up more than 40% in 2025. However, the market is still cautious. There is uncertainty about what the U.S. Federal Reserve will do with interest rates, and immediate supply shortages seem to be easing.
Spot prices are currently trading lower than future contracts, a sign that there is plenty of metal available right now. Despite this, the long-term appetite from China is keeping a floor under prices.
