Copper Weighed Down by AI and Warehouse Flows - ADM Investor Services
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8 Articles
Copper Declines as Tech-Stock Selloff Dulls Appetite for Risk
Sector Update - Copper Outlook: Selloffs Are Entry Points - Research Portal
Copper fell ~2.5% on COMEX yesterday amid an AI-equity led sell-off and LME warehouse inflows, not due to any real change in the physical market or the supply pipeline. We see such sell-offs as entry points. On the physical side, smelters are paying miners ~US$272/t to secure concentrate, buyers outside the US are paying record premiums for 2027 metal, and new mines can take decades to reach production and need at least US$5/lb copper to justify going forward. Five numbers tell the story. 1) Smelters are paying miners for feed. The Asia concentrate treatment charge fell to -US$272/t on October 9, the deepest in our series and negative for 95 straight weeks. 2) The majors are producing less. For example, BHP (ASX:BHP, Not Rated) mined 400.7 kt of copper in Q3 2026, 19% less than a year earlier. 3) Chile is producing less. August output fell 12.8% YoY to 369.5 kt, the lowest month since at least 2018. 4) New mines are increasingly expensive to build. Hudbay’s (TSX:HBM, Not Rated) newly approved Copper World mine in Arizona will cost about US$20,300/t of yearly Cu output, by our estimate. 5) Cu to Au ratio. One tonne buys 3.46 oz, less than in 91% of months since 1980.
Copper prices on the London Metals Exchange declined during Thursday's dealings, under pressure to increase metal flows to stock exchanges, along with a large wave of sales of technology companies' shares following concerns about the feasibility of large spending on artificial intelligence. The London Metals Exchange's data showed that its total copper stocks rose for three consecutive days, after receiving warehouses 13.52 thousand [...].
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