The price of copper per kilogram is eroding in the face of a speculative trend

The metals markets are experiencing a significant correction phase, led by copper. The downward trend is accelerating, revealing an increasing disconnect between market movements and actual economic fundamentals. This situation raises questions about the sustainability of current price levels and the risks of a more substantial correction.

Widespread Decline Fueled by Speculative Movements

The price of copper per kilogram has recorded its third consecutive day of decline on the London Metal Exchange, according to Jin10 data. Industrial metal prices are around $12,800 per ton, marking a clear deterioration in technical outlook. This week’s performance has been particularly challenging, with a decline of 2.9% since the start of the period, the worst weekly performance since last spring.

Analysts point to excessive speculation as the main culprit for this drift. Purely strategic purchases have driven prices away from levels justified by actual demand, creating a bubble that could burst suddenly.

Record-high Stocks Signal Weakening Consumption

Stock accumulation in warehouses in London and New York has reached levels not seen in over two decades. These inventory levels, the highest since 2003, reflect weakened industrial consumption and a largely excess supply. This structural situation sharply contrasts with the sustained price levels, highlighting the extent of the imbalance between supply and demand.

The continued stock buildup indicates that demand is not meeting the production flows. This economic reality should naturally weigh on prices, but speculative pressures are artificially maintaining copper prices at high levels.

Institutional Investors Warn of Overvaluation

The financial sector is converging on a similar diagnosis. BNP Paribas has joined Goldman Sachs and several other leading institutions in signaling that copper prices have significantly exceeded their fair values. David Wilson, a strategist at BNP Paribas, states in his analysis that the metal remains “considerably overvalued,” with prices exceeding $11,000 to $11,500 per ton, representing “almost exclusively speculative behaviors lacking economic justification.”

This consensus among major investors underscores the extent of the disconnect between economic fundamentals and price trajectories. The emerging consensus suggests an imminent correction once speculative pressures diminish.