TD Securities’ commodity team notes that Copper is seeing large CTA (Commodity Trading Advisors) selling as markets look past Strait of Hormuz supply risks and focus more on macro and demand-side weakness. They highlight that upcoming US tariff decisions could temporarily support Copper prices, but soft Chinese physical premiums and rising commercial inventories point to a deteriorating demand profile.

Tariff decision offsets weakening demand

"Base metal unwind. CTAs are large-scale sellers of copper, zinc and nickel on the day, while aluminum remains skewed to additional marginal selling."

"As the market begins to look past supply risks tied to the Strait of Hormuz, base metals are increasingly prone to any signs of macro/demand-side weakness."

"For copper, next week's tariff decision uncertainty is likely to keep prices supported, however easing physical premiums in China continue to point toward a weaker demand profile."

"While SHFE inventories are falling, measures of commercial inventories are starting to rise in the Middle Kingdom amid ample supply from smelters and softer demand."

"The red metal is also becoming more prone to demand-side weakness, however prices would need to fall to $13,000/t before further systematic selling kicks in."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)