Market News

(Bloomberg) -- Copper surged by the most in more than 16 years as metals extended a dramatic start to the year fueled by a wave of intense speculative trading in China.

Chinese investors are piling into metals as they ride a powerful wave of momentum that has lifted everything from tin to silver to record highs. The surge in copper took place at a time of day when Chinese traders dominate flows, with prices on the London Metal Exchange rising more than 5% in less than an hour starting at 2.30 a.m. London time.

“This is all driven by speculative funds,” said Yan Weijun, head of nonferrous metals research at Chinese trader Xiamen C&D Inc. “It’s likely all Chinese money given the surge is in Asian hours.”

Prices gained as much as 7.9% to trade above $14,000 a ton for the first time ever. The industrial metal, which is used in almost every electrical application, has risen 25% since the start of December.

Copper has long been a favorite of investors who see the energy transition and the growth of data centers driving demand. Still, the recent surge in prices has come in spite of indications of weak demand in China itself, which accounts for about half of physical consumption of the metal, and a widening contango on the LME, an indication of ample supplies.

The speculative frenzy has driven a surge in volumes on the Shanghai Futures Exchange, China’s top commodities trading platform. January was already the busiest month on record for the SHFE’s six base metals as of last week, and copper racked up its second-biggest daily trading volumes ever on Thursday.

It’s been an eye-watering few weeks for commodities, which have been aided by a sinking US dollar, rising demand for real, physical assets, and elevated geopolitical tensions as the Trump administration follows a more assertive foreign policy. Most recently, speculation that the next Federal Reserve chief will be more dovish than Jerome Powell has aided the rally.

“Commodities are taking turns to rally,” said Eric Liu, deputy general manager of ASK Resources Co. “Copper has been hovering around $13,000 and funds have been brewing over the metal for some time.”

Copper is up 6.5% at $13,943.00 a ton on the LME. Its intraday move was the biggest since 2009 — when China was rolling out massive stimulus measures in the aftermath of the great financial crisis. SHFE futures closed up 5.8% at 109,110 yuan ($15,707) a ton. Other metals rallied, with aluminum rising 2.2% and zinc advancing 4.3% in London.