The main Shanghai copper contract, Cu2603, saw its price surge by 6.71% on January 29, 2026, closing at 109,110 yuan per tonne in the afternoon session. Trading volume for the weighted copper contracts also showed a significant and substantial increase.
Currently, from a purely fundamental perspective, the recent situation for both copper and aluminum is difficult to describe as optimistic. High prices have exerted a relatively obvious suppressive effect on downstream demand, leading to strong wait-and-see sentiment among downstream users and a build-up in inventories. However, against the backdrop of persistently strong precious metal prices, both copper and aluminum, after a period of sideways consolidation, have once again become relative value plays compared to precious metals like gold and silver, both in terms of volatility and price levels, while also sharing some similar attributes. Consequently, even with the recent weak fundamental performance, these metals have displayed robust price trends.
Looking ahead, given the sharp and rapid price surge in the short term, immediately entering short positions is not recommended. It will be crucial to continuously monitor changes in daily trading volume going forward. If signs emerge that prices are rising but trading volume fails to keep pace, then companies with hedging needs to sell could consider opportunistically entering the market. For speculative positions, it is still advisable to avoid holding short positions in relatively nearby month contracts. For companies with hedging needs to buy, the approach should remain as previously suggested: adopt a "short, flat, and fast" strategy—meaning hedge the consumption volume required for the next two to three weeks, and for now, it remains inadvisable to build excessively large virtual inventories. It may be preferable to wait for a potential price correction to increase buying hedge volumes, potentially as demand weakens further approaching the Chinese New Year holiday.
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