Since they have come, let them be at ease.

This recent copper price decline is a trade I’ve been closely monitoring for a long time. Regarding its direction, my view has always been clear: short-term bearish, long-term bullish. Over the past period, I’ve explained the rationale behind this trade from multiple angles across several articles. There are at least three reasons why copper is unlikely to continue rising sharply in the near term: the macroeconomic environment is turning headwind; signs of weakening in the inventory cycle have emerged; and the AI-driven market rally is also cooling down. The macro headwind actually appeared quite early. After the Middle East conflict, market expectations for rate cuts gradually faded, replaced instead by discussions about potential rate hikes. For a long time, however, rate hikes remained merely a matter of shifting probabilities—until after the Jackson Hole symposium in August, when markets truly began to feel that rate hikes were drawing near. The shift in AI-related sentiment occurred in July. Following the sharp rally and subsequent rapid correction in SK Hynix’s stock, the globally synchronized AI-themed rally noticeably cooled off. The inventory cycle turned weaker in July, and the non-ferrous metals sector had even entered a phase of passive inventory buildup as early as June. Logically, under such conditions, copper should not have continued performing so strongly. Yet not only has copper maintained a high-level sideways consolidation for an extended period, but it recently hit a new high on news related to copper tariffs. This is precisely where markets most easily lull investors into complacency. Grand narratives always provide ready-made justifications for price increases—and such stories are often extremely difficult to falsify. In last week’s article, I specifically cautioned that the more unfalsifiable a narrative is, the more likely it is to temporarily obscure genuine shifts in fundamentals. Within days, reality swiftly reasserted itself. Yet I write these words not to prove how accurate my forecasts have been, nor to assert that my logic is necessarily correct.

The divergence between performance and stock prices in the non-ferrous metals sector

In the first half of this year, the overall performance of the non-ferrous metals sector was very weak. Core heavyweight stocks in the sector continued to trend sideways downward. Gold fell by 50–60%, aluminum by 40–50%, and even copper—which had relatively strong market expectations—declined by over 30%. Only certain strategic minor metals, such as tungsten, tantalum, and tin (see in-depth analysis: “Reflections and Reconsiderations on Strategic Minor Metals”), rode the AI-industry theme to deliver independent, robust price performance. However, recently released mid-year earnings forecasts tell a different story: the fundamentals of the entire non-ferrous metals sector have not deteriorated nearly as severely as their stock prices suggest. Major heavyweight firms—including Zijin Mining, Luoyang Molybdenum, Chalco, Shenhuo Co., and Western Mining—delivered earnings broadly in line with market expectations, with no major negative surprises. A pronounced divergence has thus emerged between stock prices and underlying earnings. Currently, the non-ferrous metals sector is a core cyclical industry tightly coupled with the AI industry. The AI sector’s sustained expansion and capital expenditure rollout logically support long-term, structural demand growth for industrial raw materials such as copper, aluminum, and minor metals. The sector’s sharp decline in the first half stemmed primarily from two external headwinds. First, speculative trading in non-ferrous metals became overheated early this year; rapid surges in Q1 generated substantial profit-taking positions, prompting concentrated selling by investors and triggering a deep correction. Second, persistently rising international oil prices heightened concerns over stubbornly high U.S. inflation, reinforcing market expectations of Fed rate hikes and pushing the U.S. dollar index steadily higher. Among all metals, gold is most sensitive to overseas liquidity conditions and the U.S. dollar’s trajectory—making it the weakest performer in this correction. Hong Kong-listed gold stocks, in particular, suffered a double blow from tightening liquidity and a strengthening dollar, emerging as the worst-performing subsector within non-ferrous metals. Some Hong Kong-listed gold stocks plunged nearly 70%, exhibiting declines characteristic of a severe bear market. At present, I believe market pricing of rate-hike expectations has gone too far. A meaningful reversal is highly likely in the second half of the year, substantially easing liquidity pressures. I elaborated on this outlook in my article “Gold Outlook for the Second Half of 2026,” and will not revisit it here.

Copper and Aluminum Drop as AI Selloff Saps Appetite for Risk

Oct 12, 2026

Copper and aluminum prices retreated as investor concerns over AI infrastructure financing dampened demand outlooks. Global tech stock slumps and tariff dynamics influenced trading sentiment on major exchanges.

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Copper and Aluminum Drop as AI Selloff Saps Appetite for Risk

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