AI Uncertainty Hurts Copper Sentiment

BASE METALS

Copper: LME copper fell 0.3% to $13,543; US prices are down 0.65% to $6.1550. Prices are on course for a fifth consecutive weekly decline, down approximately 1.7%, as uncertainty over AI investment and Nvidia’s leadership transition continued to weigh on sentiment. The recent correction has not been accompanied by an easing in Chinese metal availability, highlighting contrasting financial-market selling and physical tightness. Shanghai Futures Exchange inventories fell another 18.3% to 27,642 tons, their lowest since December 2023, while the Yangshan import premium reached a record $285 per ton.

The decline reflects positioning rather than weaker physical demand. Goldman Sachs flagged downside risks to its $15,400-per-ton forecast for 2027: subdued investor positioning and reduced US stock building associated with lower tariff expectations.  There is also the threat that accumulated US inventories return to the wider market and fill global warehouses.

Concentrate scarcity is also reshaping negotiations between miners and Chinese smelters. In a Reuters survey of 35 industry participants, 21 expected a fixed negative treatment charge in 2027 term contracts. Negative charges mean smelters pay miners to secure feedstock rather than receive their customary processing income. The pressure reflects mine-supply disruptions alongside expanded smelting capacity, especially in China. It is therefore evidence of tight concentrate availability.

Zinc: Zinc fell 0.3% to $3,704.

Aluminum: Aluminum declined 0.5% to $3,016. The LME cash premium over three-month metal eased to $131 per ton from Thursday’s 36-year high, indicating some reduction in immediate delivery pressure while leaving a substantial backwardation in place. LME inventories have fallen nearly 56% since January, while available on-warrant stocks are almost entirely Russian-origin metal. Concentrated ownership is adding to the pressure: one entity holds 30%–39% of LME aluminum warrants. With November settlement approaching, short-position holders face the choice of delivering metal or rolling their positions, potentially contributing to volatility in nearby spreads. Tightness is also evident in China. Shanghai exchange inventories fell 31% last week to 132,605 tons, their lowest since December, while the November aluminum contract traded at a premium of approximately 350–355 yuan per ton over December.

Emirates Global Aluminum’s latest update pointed to a continuing but incomplete recovery from the March strike on its Al Taweelah complex. The alumina refinery is operating at approximately 70% of capacity, while the associated aluminum smelter has recovered to 61% of its roughly 1.5-million-ton annual capacity. Full smelter output is expected in the first quarter of 2027, with the refinery also capable of ramping up further as requirements increase. However, the full restart of the separate 185,000-ton-per-year recycling plant has been delayed from the end of 2026 to the second half of 2027.

Tin: Tin rose 1.8% to $47,500.

Lead: Lead slipped 0.1% to $1,884.

Nickel: Nickel eased 0.1% to $16,210.

PRECIOUS METALS

Gold: December gold contracts recovered near $3,900 as yields rose and as the dollar traded near a 19-month high. October’s PPI data reflected no relief in underlying price pressures, keeping the interest rate and Fed outlook as a downside pressure on gold. Final-demand prices rose 0.3%, slowing sharply from September’s 1.4% increase, but the measure excluding food, energy and trade services advanced 0.5% for a second consecutive month. Annual headline producer inflation reached 6.5%, its highest since November 2022.

Markets overwhelmingly expect a December rate increase, with roughly a 88% probability of a quarter-point move and a 12% probability of a half-point increase. Persistent inflation and hawkish Fed commentary have shifted attention toward the size and subsequent pace of tightening.

Silver: December contracts are down 0.66% to $49.730. A Silver Institute–Metals Focus assessment pointed to weaker demand and improved physical-market liquidity. Total silver demand is forecast to fall 5% in 2026 to 1.08 billion ounces, including a 3% decline in industrial consumption. Solar installations have fallen short of expectations, particularly in China, while earlier record prices accelerated substitution away from silver. +

Jeweler consumption is expected to decline 22%, silverware demand 17%, and bar-and-coin purchases 2%. Metals Focus projects net exchange-traded-product outflows of 45 million ounces, reversing part of 2025’s 278-million-ounce inflow. Those releases, alongside metal leaving US inventories and a smaller market deficit, have eased the liquidity squeeze that helped fuel the previous rally.

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