Copper prices fell on the London Metal Exchange (LME) on Monday as some investors booked profits, following a sharp rise driven by stimulus measures in China, the world’s largest consumer of metals. The three-month copper contract on the LME dropped 0.8% to $9,905.5 per metric ton after reaching $10,158, its highest level since June 7. Despite the decline, copper prices have risen 7.6% in September, marking the metal's biggest monthly gain since April.
The recent surge in copper prices was largely fueled by China’s announcement of new economic measures aimed at revitalizing its struggling property market. On Sunday, the People’s Bank of China revealed plans to lower mortgage rates for existing home loans before the end of October, part of broader policies designed to support the country’s property sector.
China’s stock market rallied on Monday, while the yuan posted its largest quarterly gain against the dollar since 2020, making dollar-denominated metals like copper more appealing to foreign buyers. In the U.S., Comex copper futures hit a high of $4.7900 per pound, the highest since late May, before retreating to $4.5825, down 0.4% from Friday.
"Traders might have been overly enthusiastic, especially in New York, possibly reacting to a market with low liquidity ahead of China's Golden Week holiday and LME Week in London," said Ole Hansen, head of commodity strategy at Saxo Bank. Hansen noted that the physical demand for copper had yet to show significant improvement, despite the positive momentum generated by China’s stimulus measures.
LME Week, a major annual event for metals industry participants, coincided with the final trading day in China before its week-long Golden Week holiday. Some investors are expected to close their positions as the quarter ends.
Looking further ahead, mining giant BHP projected that global copper demand would rise by an additional 1 million tons per year on average until 2035, which would be double the annual growth seen over the past 15 years.
Other base metals also saw movement on the LME. Nickel rose 1.8% to $17,300, zinc increased by 0.6% to $3,109, tin climbed 1.2% to $33,300, and lead edged lower by 0.1% to $2,116.5. Aluminium declined 1.1% to $2,617.5 per ton. Zinc, nickel, and tin all reached multi-month highs during the session.
