Copper Pulls Back from Records

BASE METALS

Copper: Copper prices pulled back from record highs, weighed down by easing concerns over a potential imposition of US tariffs on critical minerals and a stronger dollar. President Trump said on Wednesday he had opted for now against imposing tariffs on rare earths, lithium and other critical minerals. Copper has been added to the US critical minerals list. Benchmark three-month copper on the LME slipped 0.68% to $13,098 overnight, after hitting an all-time high of $13,407 on Wednesday.

Copper’s rally has been fueled by supply disruptions, worries about deficits, and a strong flow of copper to the US ahead of potential tariffs, which has consequently tightened supply elsewhere. Available LME copper inventories, fell 22% to the lowest level in six months, LME data showed on Tuesday. That tightness is also appearing in the rising premium on LME cash copper over the three-month contract. The premium rose to $64 a ton on Tuesday for its highest in a month and up from $3 a week ago.

Customs data released Wednesday showed China’s unwrought copper imports in 2025 fell to their lowest level since 2020, as elevated prices weighed on demand. Imports totaled 5.32 million metric tons for the year, down 6.4% from 2024, according to the General Administration of Customs. December imports rose 2.3% from November to 437,000 tons. Unwrought copper imports include anode, refined, alloy, and semi-finished products.

Separately, China is reportedly preparing a new fiscal package to support demand and ensure a strong start to 2026. Policymakers have signaled increased stimulus, with the cabinet—chaired by Premier Li Qiang—proposing measures to boost household consumption through expanded loan support for service providers, enhanced interest subsidies on personal consumer loans, and a broader supply of high-quality services. Markets will be watching upcoming trade data for signs of follow-through.

Strong projected growth in AI and defense is expected to materially lift global copper demand, exacerbating supply constraints over the coming years. While electric vehicles have driven demand over the past decade, AI, defense, and robotics are set to become even larger consumers of the metal over the next 14 years, alongside steady demand from appliances such as air conditioners. With limited new mine approvals and ongoing disruptions, production is unlikely to meaningfully increase in 2026, reinforcing expectations of sustained copper tightness and elevated prices..

Zinc: Zinc rose 0.75%.

Aluminum: Aluminum fell 0.78%. Aluminum has found recent support following the shutdown of the Mozal smelter in Mozambique. Supply constraints have also been strained from the EU’s new carbon tax, which consequently has reduced the flow of the metal into the trade bloc. Additionally, China announced a 45 million-ton output cap, which has fueled some supply shortage concerns.

Tin: Tin advanced 1%. Recent talk of a government clampdown on illegal tin mining in Indonesia have spurred supply worries. Tin has also gained support from market bets of rapid growth and demand for tin on the back of the artificial intelligence boom. However, Tom Langston at the International Tin Association said that the supply-demand metrics have not shifted, noting that fund interest for LME tin was at record levels.

Lead: Lead added 0.19%.

Nickel: Nickel slid 1.55%. Major producer Indonesia may approve a nickel ore production quota of around 260 tons this year, lower than the estimated demand of around 340 million to 350 million tons, local media reported.

PRECIOUS METALS

Gold: Gold prices continued to fall on Thursday after falling nearly 1% on Wednesday as tensions between the US and Iran have appeared to ease. President Trump did soften warnings about striking Iran over its crackdown on civil unrest, but Washington is withdrawing some personnel from bases in the Middle East as Iran warned neighbors it would hit American bases if the US attacked. There was also no Supreme Court ruling on President Trump’s tariffs, which dented some safe-haven demand although markets still remain cautious.

Fed policy appears to remain set for the time being after December’s CPI pointed to moderating but still sticky inflation. Headline prices rose 0.3% on the month and 2.7% year over year, while core inflation increased 0.2% m/m and 2.6% y/y. Shelter and services, particularly rent, lodging, recreation, and medical care, remained the primary drivers, while declines in goods prices and gasoline helped cap broader inflation pressures. For the Fed, the absence of an upside surprise is likely welcome, but the report is unlikely to materially shift the policy outlook. Officials have recently emphasized that policy is well positioned as they wait to see how economic conditions evolve.

Gold surged to fresh all-time highs on Monday as concerns over Federal Reserve independence resurfaced following reports that the Trump administration threatened Fed Chair Jerome Powell with a criminal indictment. In a video released Sunday night, Powell accused the administration of using the threat of prosecution to pressure the central bank into cutting rates, characterizing the move as a direct challenge to the Fed’s independence. By taking the issue public, Powell underscored the gravity of the situation; a criminal investigation into a sitting Fed chair would be unprecedented.

Silver: Silver futures are down nearly 2% after spot silver hit an all-time high of $93.57 earlier in the session.

Platinum: Platinum is little changed at $2,386. The metal is finding support from safe-haven demand and a recent pivot by the European Union on its 2035 combustion-engine ban, a tight supply backdrop, and rising investment demand. Platinum and palladium are both used in cars to reduce exhaust emissions. The EU’s extension regarding the delay of its engine ban is indefinite and will also require stricter emission standards, which could require higher platinum and palladium contents in exhaust systems.

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