Copper prices are poised to reach previous highs, but be wary of a potential pullback before the "final blow."
2026-01-28 17:24:15
On Wednesday (January 28), the global base metals market showed a mixed trend. Three-month copper on the London Metal Exchange (LME) continued its strong performance, trading around $13,178 per tonne; the most active copper contract on the Shanghai Futures Exchange closed at 103,060 yuan per tonne, up 0.28% on the day. Both contracts remained in recent high ranges, slightly below the record levels reached earlier this month. Meanwhile, aluminum prices performed particularly well, driven by supply concerns, with the Shanghai aluminum main contract surging nearly 6% and LME aluminum also hitting a more than three-and-a-half-year high, becoming the focus of the market.
The immediate driver of rising copper prices was the significant weakness of the US dollar index. On Tuesday, the dollar index fell to its lowest point since February 2022. Market analysts believe that the weakening dollar makes dollar-denominated commodities cheaper for investors holding other currencies, thus boosting buying. Furthermore, an analyst from a well-known institution pointed out that market expectations for significant future interest rate cuts in the US are rising. This monetary environment typically favors hard assets, including copper, as the opportunity cost of holding non-interest-bearing assets is relatively lower.
Besides monetary factors, the supply and demand structure of the copper market itself also provides fundamental support for its prices. Recent mine production disruptions and concerns about regional supply chain mismatches triggered by tariff rhetoric continue to constrain the supply side. This provides support for copper prices at both the macro and micro levels. From a technical chart perspective, LME copper, on the 240-minute candlestick chart, has risen from a previous low of approximately $11,121 to $13,407 and is currently in a high-level correction phase, with the price around $13,155. The key moving average system shows a bullish alignment, and the price has stabilized above the short-term and medium-term moving averages. Momentum indicators suggest a short-term bullish market, but some indicators have entered overbought territory, suggesting a risk of a technical correction.
In contrast to the steady rise in the copper market, the aluminum market experienced more dramatic fluctuations. Shanghai aluminum futures prices rose nearly 6% intraday, while LME aluminum prices also broke through $3,310 per ton. A well-known investment bank significantly raised its first-half outlook for aluminum prices in its latest report, increasing its target price from $2,575 to $3,150 per ton. The bank believes the core logic driving the price increase lies in low global inventories, uncertainty surrounding power supply for new smelting projects in Indonesia, and robust global demand. This market trend, driven by tight inventories and supply concerns, contrasts sharply with the copper market, which is more driven by macroeconomic and financial factors.
In other metals, tin prices also recorded a significant increase, with both Shanghai tin and LME tin rising by more than 2%. A senior industry analyst cautioned that as a commodity with a relatively small market size and lower liquidity than other base metals, the movements of investment funds can have an impact on tin prices beyond fundamentals, leading to increased market volatility. This has already been reflected in the recent surge in prices of some minor metals.
Looking ahead, short-term copper price movements will remain closely correlated with fluctuations in the US dollar index. If the dollar continues its weakness, copper prices are expected to test the historical high reached this month. A key resistance area is around $13,400, the previous high for LME three-month copper, which is also the upper boundary of the recent upward channel. Support levels to watch are the psychological level of $13,000 and the intersection of the 20-day and 60-day moving averages. Intraday trading will require close monitoring of the dollar index's movements and the volume and open interest in LME copper near key price levels. For the Shanghai copper futures contract, its price movement will be influenced by both international markets and changes in domestic spot premiums/discounts and inventory data. Current market sentiment is generally bullish, but investors should be aware of potential profit-taking pressure after continuous price increases and any news that could ease supply tensions. After a strong rally, the sustainability of aluminum prices will depend on whether the reality of low inventories and expectations of supply disruptions are confirmed; its volatility may be higher than that of copper. Overall, the base metals market is currently in a complex environment driven by a combination of macro liquidity expectations and the fundamentals of the individual commodities.
The immediate driver of rising copper prices was the significant weakness of the US dollar index. On Tuesday, the dollar index fell to its lowest point since February 2022. Market analysts believe that the weakening dollar makes dollar-denominated commodities cheaper for investors holding other currencies, thus boosting buying. Furthermore, an analyst from a well-known institution pointed out that market expectations for significant future interest rate cuts in the US are rising. This monetary environment typically favors hard assets, including copper, as the opportunity cost of holding non-interest-bearing assets is relatively lower.
Besides monetary factors, the supply and demand structure of the copper market itself also provides fundamental support for its prices. Recent mine production disruptions and concerns about regional supply chain mismatches triggered by tariff rhetoric continue to constrain the supply side. This provides support for copper prices at both the macro and micro levels. From a technical chart perspective, LME copper, on the 240-minute candlestick chart, has risen from a previous low of approximately $11,121 to $13,407 and is currently in a high-level correction phase, with the price around $13,155. The key moving average system shows a bullish alignment, and the price has stabilized above the short-term and medium-term moving averages. Momentum indicators suggest a short-term bullish market, but some indicators have entered overbought territory, suggesting a risk of a technical correction.
In contrast to the steady rise in the copper market, the aluminum market experienced more dramatic fluctuations. Shanghai aluminum futures prices rose nearly 6% intraday, while LME aluminum prices also broke through $3,310 per ton. A well-known investment bank significantly raised its first-half outlook for aluminum prices in its latest report, increasing its target price from $2,575 to $3,150 per ton. The bank believes the core logic driving the price increase lies in low global inventories, uncertainty surrounding power supply for new smelting projects in Indonesia, and robust global demand. This market trend, driven by tight inventories and supply concerns, contrasts sharply with the copper market, which is more driven by macroeconomic and financial factors.
In other metals, tin prices also recorded a significant increase, with both Shanghai tin and LME tin rising by more than 2%. A senior industry analyst cautioned that as a commodity with a relatively small market size and lower liquidity than other base metals, the movements of investment funds can have an impact on tin prices beyond fundamentals, leading to increased market volatility. This has already been reflected in the recent surge in prices of some minor metals.
Looking ahead, short-term copper price movements will remain closely correlated with fluctuations in the US dollar index. If the dollar continues its weakness, copper prices are expected to test the historical high reached this month. A key resistance area is around $13,400, the previous high for LME three-month copper, which is also the upper boundary of the recent upward channel. Support levels to watch are the psychological level of $13,000 and the intersection of the 20-day and 60-day moving averages. Intraday trading will require close monitoring of the dollar index's movements and the volume and open interest in LME copper near key price levels. For the Shanghai copper futures contract, its price movement will be influenced by both international markets and changes in domestic spot premiums/discounts and inventory data. Current market sentiment is generally bullish, but investors should be aware of potential profit-taking pressure after continuous price increases and any news that could ease supply tensions. After a strong rally, the sustainability of aluminum prices will depend on whether the reality of low inventories and expectations of supply disruptions are confirmed; its volatility may be higher than that of copper. Overall, the base metals market is currently in a complex environment driven by a combination of macro liquidity expectations and the fundamentals of the individual commodities.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
