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Copper Slides as Dollar Strength Weighs

Copper prices retreated more than 4% this week as a stronger US dollar and rising inventories pressured the market. MCX copper fell from 1,232.10 to below 1,182 per pound, tracking weakness in global benchmarks. The US Dollar Index climbed to a 3.25-month high of 99.68, dampening demand for dollar-denominated metals. Meanwhile, inventories on the London Metal Exchange and Shanghai Futures Exchange surged to multi-year highs, signaling comfortable supply. Although Chile’s production slipped and long-term deficit forecasts persist, near-term sentiment remains cautious amid weaker Chinese manufacturing data and fading Federal Reserve rate-cut expectations.

Key Highlights

*  MCX copper drops over 4% from weekly high.

*  Dollar Index jumps to 99.68, pressuring metals.

*  LME and SHFE inventories hit multi-year highs.

*  China manufacturing PMI contracts at 49.0.

*  2026 deficit forecasts support long-term outlook.

Copper prices retreated sharply this week, with MCX futures sliding from a high of 1,232.10 to below 1,182 per pound, marking a decline of more than 4%. The pullback reflects growing macro headwinds, particularly a resurgent US dollar and mounting inventory levels across major exchanges.

The US Dollar Index surged to 99.68, its highest level in over three months, as geopolitical tensions and elevated oil prices stoked inflation concerns. A stronger greenback makes dollar-denominated commodities more expensive for overseas buyers, dampening global demand sentiment. At the same time, expectations for near-term Federal Reserve rate cuts have faded, reinforcing the “higher for longer” narrative and supporting the dollar’s rally.

Supply-side data also weighed on prices. Inventories on the London Metal Exchange jumped 44% in February to 257,675 tonnes. Deliverable stocks on the Shanghai Futures Exchange climbed to a record 391,529 tonnes. Combined inventories across major exchanges have now surpassed 970,000 tonnes, marking a 21-year high and signaling comfortable short-term availability.

On the demand front, China’s official manufacturing PMI slipped to 49.0 in February, reflecting contraction amid seasonal disruptions. Meanwhile, Chile’s copper output fell 3% year-on-year, underscoring ongoing operational challenges despite high prices.

Looking ahead, the International Copper Study Group forecasts a 150,000-tonne global deficit in 2026, while major banks project firm long-term prices supported by structural demand from electrification and AI-driven infrastructure.

Finally, copper faces near-term pressure from dollar strength and rising inventories, but structural supply constraints and long-term demand trends continue to underpin the broader outlook.

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