Copper Rebounds As Stockpiles Rise, Mining Shares Swing

Copper traded lower in London on Wednesday, February 4, after a sharp rebound the prior session, as investors weighed a fast shift from speculative surge to inventory reality. The three-month London Metal Exchange copper price slipped to about $13,383 a ton by mid-morning, after a 4.6% jump on Tuesday to roughly $13,478. The move matters for markets because the copper path feeds directly into mining equities, inflation expectations, and the balance between the U.S. dollar and risk appetite.

The metal remains well below last week’s record peak of $14,527.50 a ton and above Monday’s low near $12,414.50. That range has been wide enough to lift options premiums across industrial metals, and it has forced systematic funds to cut size, a channel that can amplify short-term swing moves even when physical demand is unchanged.

Rising Stockpiles Shift Focus From Momentum To Fundamentals

Inventories are back in the spotlight. Registered stocks across London Metal Exchange, Shanghai Futures Exchange, and Comex warehouses have climbed to more than 930,000 tons combined, more than doubling since August. When visible supply rises that quickly, the market usually demands a clearer story on near-term consumption, especially when prices are still elevated versus levels many miners use for project economics.

Spot pricing has also sent a signal of near-term availability. In recent sessions, cash copper has been trading below the three-month contract in London, a structure consistent with sufficient short-term supply rather than an acute squeeze. That shift reduces the incentive to pay up for immediate delivery and can encourage holders to keep metal in storage instead of chasing prompt material.

Chinese Buying Helped The Rebound, But Conviction Looks Thinner

The Tuesday rebound was supported by bargain hunting after a rapid drop, with fabricators and funds stepping back in as prices corrected more than 10% from the peak. Ahead of China’s Lunar New Year, some manufacturers typically restock, and that restocking demand can lift prices quickly when liquidity is thin.

The latest rally in commodities has also been driven by portfolio allocation flows, with some investors rotating toward metals as a hedge when they see less value in currencies and government bonds. That flow can be powerful, but it is also sensitive to funding conditions and to what happens next in U.S. monetary policy.

Dollar Strength Has Become A Primary Macro Driver

A firmer dollar has pressured dollar-priced metals in recent sessions, a familiar mechanism in commodities. When the dollar rises, it raises the local-currency cost for importers and tends to tighten financial conditions. The dollar’s move has also been linked to shifting expectations around U.S. rates, which affects the opportunity cost of holding non-yielding assets and the appetite for leveraged commodity positions.

That channel runs into bonds through inflation pricing. Copper is a key input into electrification and grid investment, so sustained strength can support inflation breakevens, while sharp declines can pull them lower. In a week where copper can move more than $2,000 per ton peak-to-trough, rates markets often respond by repricing near-term inflation risk and widening the range of plausible policy outcomes.

Mining Shares React Through Earnings Leverage And Balance Sheets

Mining shares have swung with the metal because profits are highly sensitive to price at current levels. When copper rebounds, major producers typically see outsized moves as investors translate spot prices into near-term cash flow, dividend capacity, and buyback potential. The same leverage cuts the other way when prices fall, particularly for higher-cost operations and for miners with large capital programs.

Credit spreads are a secondary but important channel. Strong copper prices can tighten spreads for miners and service contractors by improving coverage ratios and reducing refinancing risk. A swift decline can widen spreads, especially for single-asset producers and developers that rely on risk capital, because lenders reprice collateral and project returns.

Supply Additions And A Softer Demand Backdrop Compete In 2026

The 2025 run-up was supported by disruptions and tighter mined supply, but expectations for higher output in 2026 are rising as some mines ramp up production. That potential supply increase sits alongside a mixed demand picture shaped by tariffs and global manufacturing softness in parts of 2025.

China remains central. It consumes more than half of global copper, and the Lunar New Year period in mid-February can temporarily slow industrial activity. That seasonal pause can test speculative positioning if inventories are already rising and if end-user demand does not accelerate immediately afterward.

Two Institutional Views Frame The Price Debate

An analyst at Macquarie, Alice Fox, argued that the market had moved beyond fundamentals and estimated last year’s balance at around a 600,000-ton global surplus, adding that prices would need to be below $11,000 a ton to reflect underlying conditions. StoneX analyst Natalie Scott-Gray said supply risks outweigh a demand slowdown in their framework, but she does not view the market as historically out of balance, and she noted that fundamentals do not support current levels.

Base Case, Upside, And Downside Paths For Copper And Markets

Base case: prices consolidate as the rebound tests inventory reality, with copper holding a broad $12,800–$13,800 band through February while stockpiles remain high. Under this path, mining equities stabilize after recent volatility, the dollar stays a key driver, and rate markets treat copper as a marginal input into inflation breakevens rather than a dominant force. A trigger for this base case is steady visible inventories near the 930,000-ton area and no sharp shift in U.S. rate expectations.

Upside scenario: copper pushes back toward $14,000 if Chinese restocking is stronger than seasonal norms and if supply additions disappoint, tightening prompt availability and lifting nearby spreads. A trigger would be a renewed drawdown in exchange inventories or a return of spot premiums that signal a physical squeeze. In that scenario, mining shares can outperform broader equities, credit spreads in the sector can tighten, and cyclical currencies can gain as risk appetite improves.

Downside scenario: copper slides toward $11,500–$12,000 if stockpiles continue to rise and the dollar strengthens further on higher-for-longer rate pricing, forcing leveraged funds to cut exposure. A trigger would be another step up in visible warehouse stocks alongside weaker post-holiday industrial activity in China. In that outcome, miners underperform, volatility rises across commodities, and risk sentiment can deteriorate, pulling down cyclical equities while supporting safe-haven FX.