- Copper extended last week’s drop on Monday, falling as much as 0.6% in London after a second straight weekly decline, as AI stocks came under further pressure and sapped risk appetite ahead of the Federal Reserve’s policy meeting. The metal was down 0.5% at $14,247.50 a ton on the London Metal Exchange as of 11:37 a.m. in Shanghai.
- Copper is a key input for data centers and power infrastructure, tying it closely to the AI trade, and stocks kept struggling as investors braced for more earnings from megacap tech companies, according to Bloomberg.
- Markets are pricing in a nearly 10% chance that the Fed raises rates on Wednesday, while bets on a hike before year-end are much stronger at over 70%. Higher borrowing costs are a headwind for economic growth and demand for commodities.
- Supply remains tight in China because of falling domestic output and the flow of metal to the US ahead of possible import tariffs. The Yangshan premium, a gauge of demand for imported copper, rose to its highest level in data going back to 2017. Aluminum fell 0.4% and nickel dropped 0.9%.
What Happened?
Copper kept falling on Monday after two straight weekly declines, as the selloff in AI-linked stocks spread to the metals that feed the data-center buildout. Investors are also weighing stubbornly high energy prices ahead of the Fed’s Wednesday decision, with markets pricing over 70% odds of a rate hike before year-end. Copper traded at $14,247.50 a ton on the LME, down 0.5%, while other base metals were flat to lower.
Why It Matters?
Copper has become a proxy for the AI infrastructure trade because data centers and the power grid that supports them use large amounts of the metal. When investors pull back from AI stocks and brace for higher rates, copper loses support on both fronts: weaker expected demand and a stronger headwind for growth. US tariff expectations are a separate force, pulling metal toward the US and keeping Chinese supply tight, which helps explain why prices have not fallen faster.
What’s Next?
The Fed decision on Wednesday and earnings from Microsoft and Alphabet the same day are the next tests for copper and the AI trade. Wu Kunjin, head of base metals research at Minmetals Futures, said doubts that the US will impose copper levies and weaker Chinese consumption going into winter could ease the market’s tightness. For US investors, copper miners and copper-focused ETFs are likely to keep tracking both AI sentiment and tariff headlines.
Affected Tickers and Coins: COPX, FCX, SCCO
Source: Bloomberg
