Copper prices have fallen from their late October high of over $11,000 per ton. This decrease is seen as a natural correction, as there were concerns about supply without clear signs of a raw material shortage affecting production.
Chinese customs data shows copper ore imports fell for the second consecutive month in October, although they remain high. Overall, this year’s imports are about 7% higher than the previous year. This indicates stable copper production levels for now, even if there isn’t much further expansion.
There is less demand for unwrought copper and copper products, reflecting limited demand beyond domestic production. The insights on this market movement are selected by a team of journalists at FXStreet, featuring observations by known experts and analysts.
The significant drop in copper prices from the record high of over $11,000 at the end of October is a healthy correction. Supply fears seem to have been overblown, as there were no clear signs of a raw material shortage that would halt metal production. We believe the market is now better reflecting the underlying fundamentals.
Data from Chinese customs authorities showed that copper ore imports fell in both September and October, though they remain high for the year. This suggests that while copper production in the country will stay strong, it is unlikely to expand much further from here. At the same time, subdued imports of refined copper point to limited demand beyond what is produced domestically.
Recent data confirms this softening picture, as London Metal Exchange (LME) stockpiles have risen by 9% over the last three weeks, reaching their highest level since June. Furthermore, China’s official manufacturing PMI, released last week on October 31st, came in at 49.5, indicating a slight contraction and reinforcing the view of weaker industrial demand. This is a contrast to the stronger readings we saw earlier in the year.
Given this backdrop, traders should reconsider aggressive bullish positions. The sharp upward momentum has clearly broken, and the path of least resistance in the coming weeks may be sideways or slightly lower. We view this as a period for cautious positioning rather than buying the dip.
With implied volatility still elevated from the recent price swings, selling out-of-the-money call spreads could be an effective strategy to capitalize on range-bound price action. This approach allows traders to collect premium while defining their risk if the market moves unexpectedly higher. For those anticipating a further modest decline, bear put spreads offer a defined-risk way to position for that outcome.
This environment is reminiscent of the period we saw back in 2022, when initial fears of supply shortages eventually met the reality of a slowing global economy. In that instance, copper prices consolidated for months after a sharp pullback from their peak. We may be entering a similar phase of price discovery now.
