"This kind of market is something you might never encounter in your whole life!" Commodities are soaring one after another, and Chinese investors have sent copper prices skyrocketing.

"This kind of market is something you might never encounter in your whole life!" Commodities are soaring one after another, and Chinese investors have sent copper prices skyrocketing.

Driven by strong buying from Chinese investors, copper prices posted their largest single-day gain in sixteen years, as the commodities market experiences a rare and historic celebration.

On Thursday afternoon, copper prices soared as much as 11%, breaking through a record high of $14,500 per ton for the first time, followed by a sharp correction at the high. Since early December, copper prices have risen about 21% in total.

This surge coincided with the US dollar exchange rate falling to its lowest point in more than four years, prompting Chinese investors to make a large-scale shift to the commodities market. Prices for metals from tin to silver have been pushed to historic highs.This wave of buying, led by Chinese traders, ignited the market at 2:30am London time. Copper prices on the London Metal Exchange (LME) surged more than 5% within less than an hour, and the six major base metals index closed at a record high.

The dramatic movement has shocked veteran market participants. According to Bloomberg, Mark Thompson, a former Trafigura Group trader with thirty years of experience in the copper market, said: "A market like this may only come once in a lifetime. We are just one supply disruption away from $20,000 copper."

Chinese Funds Drive 'Historic' Market Moves

Chinese investors are stirring up huge waves in the commodities market, driving a surge in trading volume on the Shanghai Futures Exchange (SHFE). As of last week, January had already set the busiest monthly record for the six major base metals in SHFE history, with Thursday's copper single-day trading volume hitting the second highest on record.

This rally has a clear time pattern. The initial surge on the London Metal Exchange (LME) occurred during the period when Chinese traders dominated capital flows. Eric Liu, Deputy General Manager at ASK Resources, noted: "Commodities are rising in turn, copper prices have been hovering around $13,000 previously, and capital has been brewing for some time."

Although the market pulled back on Thursday afternoon, copper prices ultimately closed up 4.1% at $13,618/ton at the LME. The intraday price swing was the biggest since 2009. Meanwhile, SHFE copper futures prices rose 5.8% at Thursday's close to 109,110 yuan, briefly touching 114,000 yuan in night trading before giving back gains.

Dual Boost from Dollar Weakness and Macro Policy

This week's surge in metals prices is closely linked to the macroeconomic environment.

The US dollar index fell to its lowest point in more than four years, making dollar-denominated commodities more attractive to many buyers. In addition, signals from Trump that he is not worried about dollar weakness further encouraged investors to sell US government bonds and turn to commodities.

Tom Price, senior commodities analyst at Panmure Liberum, pointed out: "Amid concerns about further dollar weakness, prudent investors are repatriating capital."

Moreover, expectations around Federal Reserve policy have fueled the rally. Fed Chair Powell kept borrowing costs unchanged on Wednesday while speaking of a "marked improvement" in the US economic outlook. The market speculates that the next Fed Chair may be even more dovish than Powell, and combined with the Trump administration's tougher foreign policy leading to heightened geopolitical tensions, demand for physical assets has increased.

Price Rally Contradicts Signs of Weak Physical Demand

Investors have long been optimistic about copper’s critical role in the energy transition and data center growth. Tesla plans to spend $20 billion this year on resource shifts toward robotics and artificial intelligence (AI), further strengthening this investment outlook, with copper, aluminum, and tin seen as major beneficiaries.

Chi Kai, Chief Investment Officer at Shanghai Cosine Capital Management Partnership, said: "Under a cycle where rate cuts are maintained in the US, expectations for rising copper prices remain unchanged. As long as the US continues to drive AI, chips, and power construction, there is no clear limit on how high prices could rise."

Despite soaring prices, market fundamentals are not without concerns. The current rally contradicts signs of weak physical demand. At the same time, the LME market is showing a widening futures premium (contango) structure, indicating ample supply.

Amid speculative frenzy, the SHFE has implemented measures to cool the market, including raising margin requirements on some contracts and imposing trading limits on specific clients in the tin and silver markets. On Thursday, the exchange reported that a client violated unusual trading rules and urged investors to "further strengthen risk awareness, invest rationally, and jointly maintain stable market operations."

The market has also seen warning voices. Trina Chen, co-head of China equities at Goldman Sachs, warned in an interview with Bloomberg TV that the stunning surge in metals prices may have outpaced real demand, and as Chinese physical buyers retreat due to high prices, the market could experience a "technical correction."

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