Copper slumps after hitting record as tech bubble fears resurface

Copper plunged more than 3% on Friday, after hitting a record high earlier in the session, as renewed fears of the AI bubble bursting sparked a broad sell-off of riskier assets.

Benchmark three-month copper HG1! on the London Metal Exchange fell as much as 3.5% to $11,451.50 and was trading down 2.8% at $11,537.50 as of 1700 GMT.

The metal used in power, construction and manufacturing earlier struck a record $11,952, within striking distance of the psychological $12,000 level.

Copper was on course to end the week down 0.7% after two consecutive weekly gains, with optimism over Wednesday's U.S. Federal Reserve rate cut fading. On the U.S. Comex exchange, copper (HGc1) fell as much as 4% to $5.21 per lb.

Traders attributed the sudden slump on Friday to nervousness over the drop in tech equities spreading to metals, with long positions in copper being liquidated in a volatile market.

"We think in the near term, supply disruptions should keep a floor under prices around the $11,000/t level," said ING analyst Ewa Manthey. "However, for the rally to extend, stronger demand - particularly from China, the largest consumer - will be crucial."

Copper inventories (CU-STX-SGH) in warehouses monitored by the Shanghai Futures Exchange rose 0.5% over the past week to 89,389 tons, the bourse said on Friday.

"The risk of demand destruction also shouldn't be overlooked," Manthey added. "Chinese buyers are showing some signs of price sensitivity."

The entire LME complex turned red, with aluminium ALI1! falling 1.1% to $2,866.50 a ton and zinc ZNC1! losing 2.3% to $3,129.50 after notching a 13-month high on Thursday.

LME data on Friday showed 1,800 tons of inflows into zinc stocks (MZN-STOCKS), which at 61,925 tons are at their highest since August.

Nickel NICKEL1! edged down 0.2% to $14,585, lead LEAD1! lost 1.1% to $1,966.50, touching its lowest since October 16, and tin FTIN1! slipped 0.6% to $41,505, after earlier hitting its highest since April 2022 on supply concerns.