Copper prices fell to their lowest levels in four months on Thursday, driven by concerns over weak demand and the potential for higher US interest rates. The selloff intensified after news broke that Nvidia (Nasdaq: NVDA) CEO Jensen Huang was stepping down, raising worries about the future of the artificial intelligence industry. Benchmark copper on the London Metal Exchange dropped 1.5% to $13,610 a metric ton, though it recovered slightly from an earlier low of $13,515.
A stronger US dollar, which makes dollar-priced metals more expensive for foreign buyers, also contributed to the decline. Analysts noted that funds trading on numerical models are sensitive to this relationship. US Federal Reserve officials have hinted at a possible 50-basis-point rate hike at their December 8-9 meeting, citing persistent inflation concerns.
Panmure Liberum analyst Tom Price pointed out that industrial demand for copper remains soft, and the drop in technology stock prices has added to the pressure. "Every time AI takes a hit, copper demand and prices come under pressure too," he said. Meanwhile, the premium for cash aluminium over the three-month forward contract hit a 36-year high above $175 a ton, partly due to low stocks in LME-registered warehouses.
Aluminium stocks in LME warehouses have plummeted nearly 56% since January, while Shanghai Futures Exchange stocks fell 31% last week to their lowest since December. The aluminium price curve on ShFE also showed backwardation, with the November contract trading at a 355 yuan premium to December. Other metals like zinc, lead, and tin saw declines, while nickel edged up 0.3% to $16,235 a ton.