Amidst heightened volatility in global metal markets, the London Metal Exchange (LME) introduced further uncertainty on Friday by delaying its opening for approximately one hour due to a technical fault. The electronic trading system of the world's largest metals exchange did not commence operations until 10:00 AM, a full hour behind the scheduled start time. Multiple traders indicated that before receiving the exchange's notification of the delayed opening, market participants were already speculating about which entities might face substantial losses. In response, the LME stated in a release that Friday's delayed opening was a precautionary measure. The LME explained, "During our routine startup checks for LMEselect, the team identified a potential issue with a specific component. As a precaution, we decided to postpone the market open while the team conducted an investigation." The exchange expressed satisfaction at being able to "swiftly resolve the issue, allowing us to start LMEselect with only minimal delay." It confirmed that markets are now functioning normally.
The timing of this malfunction is particularly sensitive, as jittery market participants grapple with sudden and extreme price swings. Fueled by a speculative trading frenzy, global metal markets have experienced a dramatic start to 2026. Trading volumes for six key base metals on the Shanghai Futures Exchange hit a record high in January, with this fervor spilling over to influence metal prices on the LME. This week's sharp market movements have been triggered by a confluence of factors: the threat of US military action against Iran, the White House's renewed tariff threats against allies like South Korea and Canada, and rising demand for physical assets driven by a weakening US dollar, all combining to ignite a buying spree. Several traders pointed out that a system failure, occurring at a time of high market tension, could trap traders seeking to close positions. A prolonged outage would have further exacerbated market chaos.
Zhou Zhentin, a trader at KS Commodities Co., noted, "Many traders feel that current market behavior is upending their trading experience and strategies. This is forcing everyone who once studied traditional non-ferrous metals trading to pivot towards analyzing gold, artificial intelligence, and geopolitics." Copper has been at the epicenter of this frenetic trading week, driven by optimism over energy transition demand and a steady weakening of the US dollar. Just on Thursday, LME copper prices surged by 11% in a single day, marking the largest increase since 2008 and reaching a record high of $14,500 per tonne. By Friday, following the resumption of trading, LME copper prices had retreated, falling nearly 4% to $13,239 per tonne at the time of writing. Prices for other metals also trended lower.
Analysts at Citigroup wrote in a report that while copper prices could climb further in the short term, fundamental demand will present a challenge. The bank suggested that the copper market might see "resistance at the physical level" to the soaring prices, with increased scrap copper supply and the potential for so-called demand destruction ultimately acting as headwinds. Citi maintained its forecast for an average copper price of $13,000 per tonne this year. Concurrently, some indicators suggest that recent copper market conditions are not particularly tight. The spread between spot copper prices and three-month futures has shifted into a contango structure exceeding $90 per tonne, which is typically a bearish signal.
The decline in metal prices, including copper, on Friday was attributed to both profit-taking and a strengthening US dollar. Speculation that US President Trump is preparing to nominate Kevin Warsh as the next Federal Reserve Chair contributed to the dollar's rise. Although Warsh's current stance on monetary policy is seen as closer to Trump's, the market perceives him as a relatively more conventional and less dovish candidate for Fed Chair. Should Warsh succeed Powell, "the Fed could become more hawkish, and markets might anticipate fewer interest rate cuts." Commenting on the recent market activity, one participant observed, "Market expectations have become overly uniform at this stage and need some adjustment. Volatility has also become quite high, so we prefer to control risk and avoid excessive participation."
It is worth noting that while trading halts or delays occasionally occur on global exchanges, this incident has brought the issue of the LME's system reliability back into the spotlight. Following the 2022 nickel market crisis, the LME underwent comprehensive regulatory reforms, with system stability becoming a key focus area. This also marks the second major exchange malfunction within two months. In November of last year, CME Group experienced a trading outage lasting over 10 hours due to overheating in a data center, which suspended trading in stocks, foreign exchange, bonds, and commodities.
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