Copper and other base metals have eased from recent highs, following a recent run-up. The London Metal Exchange index was near 5,400, almost 4% below its record high at the end of January.
Trading may slow ahead of the Chinese New Year, when stock exchanges close from next Monday. A Mysteel survey found some copper firms in southern China halted production at the end of January and do not plan to restart until March.
China’s share of global metal demand growth has declined versus pre-pandemic years. Bloomberg Intelligence estimates China accounted for about 60% of the increase in metal demand from 2020 to 2025, compared with 137% from 2008 to 2020.
Copper on the Shanghai Futures Exchange rose to a record above RMB 100,000 per ton in late January, equal to more than USD 15,000 per ton. This move also supported higher prices on the London Metal Exchange.
The rally coincided with a sharp rise in open contracts for copper futures and options in Shanghai, reaching a multi-year high. Over the past 10 days, open interest has fallen back to around last year’s average.
Since the end of January, Shanghai copper has dropped 4.5%, which has also weighed on London copper. The article notes it was produced with an AI tool and reviewed by an editor.
As of today, February 10, 2026, we are seeing copper prices pulling back from their recent highs, which is a pattern traders should watch closely. LME copper is currently trading near $9,800 per tonne after peaking above $10,200 in late January, creating uncertainty in the market. This hesitation is occurring just before the Chinese New Year holiday period begins, which typically slows trading activity.
We remember a similar situation in early 2025, when a speculative rally on the Shanghai exchange drove copper to record prices before a swift collapse. That price action was fueled by a rapid increase in open futures contracts which then quickly vanished. The subsequent price correction serves as a clear warning against chasing rallies that are not supported by fundamental demand.
This year, while open interest in Shanghai has increased, it has not reached the extreme levels seen in early 2025, suggesting the market is more cautious. Traders should view any sharp price increases with skepticism and monitor open interest figures daily. A sudden drop in open contracts could signal that a price decline is imminent, just as it did last year.
The broader economic picture also calls for a defensive posture, as China’s ability to drive global metal demand growth has weakened. The official NBS Manufacturing PMI for January 2026 registered at 49.8, indicating a slight contraction and confirming that China’s economy is not providing the same powerful tailwind it did in the decade after 2008. We can no longer assume strong Chinese buying will support prices indefinitely.
Given the risk of a price correction similar to last year’s, derivative traders should consider buying put options to hedge downside risk. Establishing bear put spreads could also be an effective strategy to profit from a potential decline while limiting the upfront cost. These positions offer protection if the current market softness accelerates in the coming weeks.
We are also seeing rising global inventories, with LME-registered copper stocks increasing to 115,000 tonnes, suggesting supply is outpacing immediate demand. This makes selling call options against long positions a viable strategy to generate income in what could become a sideways or falling market. This approach is suitable for those who believe any further price gains will be limited.
