COMMODITIES REVIEW: conflicting signals

China’s commodity markets sent conflicting signals over the past week, with tight copper supplies and geopolitical disruptions supporting global prices while sluggish steel demand continued to weigh on iron ore. The divergence highlights China’s uneven industrial recovery: investment in electrification and advanced manufacturing remains a source of demand for metals, but weakness in traditional construction is restraining consumption of bulk commodities. Meanwhile, government intervention and trade restrictions are increasingly separating Chinese commodity prices from international benchmarks.

Copper remained the standout industrial metal. London Metal Exchange (LME) prices reached $14,323 per tonne on October 26, compared with $14,391 on October 20, a decline of $68, or 0.5%. Despite the modest retreat, prices remained historically elevated as supply constraints and competition for inventories supported the market. Goldman Sachs raised its end-2026 forecast to $14,700 per tonne, citing tightening supplies outside the United States. Reuters reported that Shanghai Futures Exchange inventories had fallen to just 54,400 tonnes, while substantial stockpiles accumulated in the US amid tariff uncertainty. This geographical imbalance is helping sustain Chinese import premiums even as high prices discourage some industrial buyers. 

Iron ore reflected a weaker side of China’s economy. The Dalian Commodity Exchange’s most-traded contract stood at RMB 670.5 ($100.52) per tonne on October 26, against RMB 672.5 (approximately $101) on October 16, a decline of RMB 2, or 0.3%, across the available comparison period. Singapore Exchange November futures traded around $90.60 per tonne, reflecting different contract specifications and delivery bases. Chinese steelmakers face weak downstream orders and squeezed margins, with daily hot-metal output falling 0.5% to 2.32 million tonnes as of October 22. Expectations of additional Beijing stimulus have nevertheless limited further losses, providing some support for major iron ore exporters, particularly Australia and Brazil. 

The week’s movements underline the increasingly uneven nature of Chinese industrial demand. Copper’s strength reflects global supply constraints and expectations for investment in electricity infrastructure, while subdued iron ore prices point to continuing difficulties in construction and steelmaking. Investors will watch whether Beijing’s next stimulus measures translate into stronger physical demand, particularly as seasonal weakness approaches. For global commodity producers, China’s purchasing decisions remain critical, but increasingly divergent regional prices mean domestic demand alone no longer determines international market direction.