ING spells out downward copper price pressure

Eva Manthey, commodities strategist at Netherland-based bank ING, has joined American red metals analyst John Gross in observing that copper’s lofty recent prices may not be supported by the global supply and demand situation.

Her March 9 analysis comes out the same week that London-based Earth-i says its February 2026 satellite tracking shows copper smelters in the People’s Republic of China were more active in February than they were the prior month.

Writes Manthey of ING, “Rising exchange inventories, increasing refined output in China and weaker Chinese import demand suggest the tight market that supported prices in recent months may be starting to unwind.”

Both Manthey and Earth-i, in its recap of February global smelting activity, try to parse the role of the mid-February Chinese or Lunar New Year holiday and its effect on inventory and production levels. China, with 17 percent of the world’s population, smelts or otherwise produces more than half of the world’s copper.

“Shanghai Futures Exchange(SHFE) inventories have recently hit a record high as physical demand softened in China, although stocks typically build seasonally around the Lunar New Year holiday,” writes Manthey, adding, “London Metal Exchange (LME) inventories, meanwhile, are approaching a 17-month high.”

She continues, “With the holiday period now over, the direction of SHFE [inventories] will be important to watch. A decline in inventories would suggest Chinese demand is holding up at current price levels.”

Chinese supply seems poised to address demand at any level, according to Earth-i. “China continues to outperform the rest of world (RoW) [category], with the country’s inactive capacity series falling by a larger 2.5 percent to just 5.0,” writes the company regarding February activity.

Earth-i calls that uptick “consistent with seasonal patterns driven by the timing of Chinese New Year, as well as the requirement to have product ready for semi fabricators to take advantage of the uptick in economic activity that comes with the end of winter in the northern hemisphere.”

High copper pricing in January and February also likely played a role, says the tracking service. “Prices that have weighed on demand since the beginning of the year appear to still be having an impact,” writes Earth-i, adding that smelting activity in the east and south central regions of China, which together account for 43 percent of Chinese output and 30 percent of global capacity, had lower idle capacity rates than usual this February,  relative to their three-year averages.

Manthey points to the fluctuating value of the United States dollar as one more variable in the copper price equation. “As copper is priced in dollars, appreciation in the currency makes the metal more expensive for buyers in other currencies, typically weighing on demand,” she writes.

Continues the analyst, “Rising exchange inventories, increasing refined output in China and softer Chinese import demand all point to improving supply availability, while macro headwinds, such as higher energy prices and a stronger U.S. dollar continue to weigh on sentiment.”

Not all is bearish, concludes Manthey, writing, “That said, structural demand linked to electrification and the energy transition continues to underpin the longer‑term outlook.”