Copper prices fell more than 5% on Monday as a sharp global selloff in metals continued for a second straight session. The fall came after an exceptionally strong rally that had pushed copper to record highs last week. From those peaks, copper is now down around 18%, as traders lock in profits and reassess the fundamentals. The decline follows a period of extreme volatility in global metals markets, where prices had surged rapidly due to strong investor participation, particularly from China, before reversing just as sharply.
Profit-taking after record highs
One of the main reasons for the drop is profit-taking. Copper futures had jumped more than 40% in 2025, due to supply disruptions, expectations of strong demand from the energy transition, and concerns about potential US import tariffs. After prices touched record levels above $14,500 per tonne on the LME, many traders chose to exit positions and book gains. The selling pressure increased on Friday and carried into Monday, pulling prices lower across global exchanges.
Stronger US dollar pressures metals
Copper prices also came under pressure after a rebound in the US dollar. The dollar strengthened following US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. Warsh is widely seen as an inflation hawk, which led markets to scale back expectations of aggressive rate cuts. A stronger dollar makes dollar-priced commodities like copper more expensive for overseas buyers, reducing demand in the short term and adding to the selloff.
“Copper witnessed a sharp pullback on Friday, ending the week at $13,150/tonne on the LME and Rs1,293/kg on the MCX, as a rebound in the U.S. dollar following the Trump administration’s nomination of Kevin Warsh, widely viewed as an inflation hawk, as the next Federal Reserve Chair, accelerated profit-taking across the metals complex, including both precious and base metals,” said Kaynat Chainwala, AVP – Commodity Research, Kotak Securities to Reuters.
Margin hikes forced traders to cut positions
Another important factor behind the fall was an increase in margin requirements by exchanges such as CME and MCX. Higher margins mean traders must put up more cash to maintain positions. This often forces leveraged investors to reduce exposure quickly. According to analysts, margin hikes triggered liquidation of long positions, increasing the price fall rather than changing the long-term outlook for copper.
“Copper touched a high of 1,480.30 on January 29, 2026, but has since corrected by about 19% and is currently trading around the 1,198 level. The decline was largely driven by margin hikes imposed by exchanges such as the CME and MCX. Additionally, US President Donald Trump announced the appointment of a more hawkish individual as the next Federal Reserve Chair, adding further pressure on prices,”Anuj Gupta, Director, Ya Wealth Research & Advisory told Reuters.
Weak near-term demand signals from China
China, the world’s largest consumer of copper, played a key role in both the rally and the subsequent fall. Heavy speculative buying had added froth to prices, especially on Chinese exchanges. Once sentiment shifted, the correction was really quick. Recent data shows softer physical demand in China, with lower import premiums and spot prices trading at discounts. The Yangshan copper premium fell below $25 per tonne, indicating reduced appetite for imported copper. Manufacturing activity in China has also stalled, weakening near-term demand even as long-term expectations remain strong.
High volatility ahead of Lunar New Year
Market participants in China are also reducing risk ahead of the Lunar New Year, a period when traders typically cut exposure due to lower liquidity and higher volatility. “Some funds are exiting ahead of the Lunar New Year to avoid risk amid such high volatility,” said Gao Yin, an analyst at Shuohe Asset Management Co to Bloomberg. “Still, the medium to long-term logic behind this round of rally remain intact. There is a unanimous bullish consensus among Chinese investors.”
Long-term outlook still supported
Long-term outlook remains supported by constrained supply and rising demand from electrification and energy transition themes. Decades of underinvestment in new mining projects continue to limit supply growth. For now, however, increased volatility, a stronger dollar, margin-driven selling, and soft near-term demand indications have combined to push copper prices about 5% lower in a single session.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.