Copper fell to its lowest in almost four months on Friday as traders blamed Nvidia's loss of CEO Jensen Huang. UBS and JPMorgan warn the chipmaker may slow the financing deals behind AI data centers. Chinese buyers, however, are paying record premiums.
Copper slid to its lowest in almost four months on Friday and was heading for a fifth straight weekly loss, with traders blaming Nvidia's loss of Jensen Huang. The exit is a convenient culprit, though, because the slide started before it. Copper has dropped every week since mid-October, and Goldman Sachs called the correction a matter of positioning in AI-linked stocks, not a sign that fundamentals have loosened.
Three-month copper on the London Metal Exchange was down 0.5% at $13,519 a metric ton as of 1000 GMT, after touching $13,456, its weakest since July 17. According to Panmure Liberum analyst Tom Price, "Every time AI takes a hit, copper demand and prices come under pressure too." He also pointed to stubborn US inflation and the prospect of Federal Reserve rate hikes.
Nvidia's CEO exit raises financing questions
Nvidia said Huang resigned Thursday as president, CEO and director, effective immediately. Chief Financial Officer Colette Kress is interim CEO while keeping her finance job. Shares closed 4.3% lower Thursday and fell about 2% more on Friday.
UBS analyst Timothy Arcuri said Nvidia has become a key source of funds for neoclouds and AI developers, and he expects a pause in its appetite for those deals even if a new CEO holds the same course. JPMorgan analysts said they do not assume existing commitments change, but new deals could take longer or cost more. Slower deals would push out data center construction and the copper that goes with it.
Goldman said copper positioning could stay subdued if equity markets start pricing an earlier slowdown in AI spending, even while data center construction continues.
Chinese buyers show no sign of retreat
Physical buyers in China are not behaving like a market braced for weaker demand. The Yangshan copper premium, a gauge of China's appetite for imports, hit a record $285 a ton on Friday. Copper stocks in Shanghai Futures Exchange warehouses fell 18.3% this week to 27,642 tons, the lowest since Dec. 23, Reuters reported.
Source: Oilprice.com
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