Copper prices have dropped from their late October peak of over $11,000 per ton. This decrease seems to be a normal adjustment, as concerns about supply did not show clear signs of a raw material shortage that would impact production. Data from Chinese customs indicates that copper ore imports have decreased for the second month in a row in October. However, they remain elevated overall, with imports for the year up about 7% compared to last year. This stability suggests that copper production levels will hold steady, but further growth may be limited. Demand for unwrought copper and copper products has decreased, signaling weak interest beyond domestic production. Observations on these market trends come from a team of journalists at FXStreet, featuring expert views and analysis. The drop in copper prices from the record high of over $11,000 at the end of October is a healthy correction. Concerns about supply appear exaggerated, as there are no clear indications of a shortage affecting metal production. The market now seems to be reflecting its true fundamentals more accurately. Chinese customs data has shown falling copper ore imports for both September and October, yet these imports remain high for the year. This indicates that copper production in China will likely remain strong but may not expand much further. Additionally, lower imports of refined copper suggest limited demand beyond domestic supply. Recent data illustrates this trend, as London Metal Exchange (LME) stockpiles have surged by 9% over the last three weeks, hitting their highest levels since June. Also, China’s official manufacturing PMI, released on October 31st, registered at 49.5, signaling a slight contraction and highlighting weaker industrial demand compared to earlier this year. In light of these developments, traders should rethink aggressive bullish positions. The strong upward trend has clearly weakened, and the most likely path in the coming weeks could be sideways or slightly down. We recommend adopting a cautious approach instead of buying the dip. With implied volatility still high due to recent price fluctuations, selling out-of-the-money call spreads could be a smart strategy to profit from price stability. This method allows traders to earn premium while managing risk if the market moves unexpectedly higher. For those predicting a modest decline, bear put spreads offer a way to position with defined risk. This situation mirrors what happened in 2022 when initial fears of supply shortages faced the reality of a slowing global economy. Back then, copper prices stabilized for months following a significant drop from their peak. We may be entering a similar phase of price discovery now.

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