Base metal prices declined sharply as Chinese purchasing activity remained subdued ahead of the Lunar New Year holiday. Buyers in China plan to step back from trading during the official nine-day period from February 15 to 23, with many companies already offering early discretionary breaks. This caution contributed to restrained market momentum.
Copper Prices Face Pressure Amid Inventory Builds
Copper prices climbed from December through January, yet top consumers hesitate to procure at elevated levels. Analysis indicates buyers are timing purchases carefully, factoring in holiday-related production pauses and lofty pricing.
Inventory for copper wire rose notably over the past 12 to one-month period. Data from Mysteel reveals that select copper rod producers in southern China suspended output starting January 25, with no restarts planned before March. Producers of pipes, strips, and plates also face potential delays due to shrinking final orders.
Such slowdowns highlight how supply optimism, fueled by anticipated demand from AI data centers, outpaces real consumption. Last week, a historic short squeeze briefly pushed Shanghai Futures Exchange (SHFE) copper below the psychological 100,000 yuan per ton threshold—equivalent to about $14,400 including 13% VAT, or roughly $12,500 on the LME excluding tax. Chinese firms snapped up supplies at those lows, underscoring the level as a key demand trigger. SHFE copper settled at 101,860 yuan per ton, falling short of aggressive buying territory.
Chile Copper Output Shows Mixed Results
Chile’s Cochilco reports that state-owned Codelco boosted December copper production 3.7% year-over-year to 181,000 tons. In contrast, BHP’s Escondida mine—the world’s largest—saw output drop 16.5% to 111,000 tons. Production at Collahuasi, operated by Glencore and Anglo American, also fell 12.1% to 36,000 tons.
Codelco disclosed that its El Teniente mine will experience declines for approximately five years following a July cave-in incident, extending an earlier three-year estimate.
Precious Metals Pull Back on Fed Watch
Gold and silver prices retreated from recent gains amid caution before Wednesday’s U.S. jobs report. Declines stayed contained, however, as the U.S. government issued security warnings for American-flagged vessels near the Strait of Hormuz. President Trump warned, “If the nuclear deal with Iran cannot be concluded, we will have no choice but to take strong economic measures.”
Trump added that one carrier group is already en route to the region, with plans under consideration for another deployment.
