Copper falls, set for worst week since March on AI rout

By Solomon Cefai

SINGAPORE, Nov 6 (Reuters) - Copper dropped on Friday and was set for its biggest weekly drop in London since March, as a rout in technology stocks battered markets.

Benchmark three-month copper on the London Metal Exchange was down 1.3% at $13,663 a metric ton by 0700 GMT. That placed it on track to fall 3.44% in the week.

The most-traded copper contract on the Shanghai Futures Exchange fell 1.08% to 106,830 yuan ($16,018.17) a ton.

The weakness reflects worries over AI investment, with copper increasingly influenced by "sentiment towards data centre expansion," said Craig Lang, principal analyst at CRU.

Technology shares were battered after Democratic wins in the US midterms fueled concerns that new regulatory oversight could cap the AI buildout.

On the other hand, supply constraints cushioned copper's decline.

"I would be cautious about calling this a sustained correction, given ongoing mine supply challenges and exceptionally tight metal availability outside the US," Lang said.

Copper stocks in SHFE-monitored warehouses fell by over 24% this week to just 33,848 tons — the lowest in almost three years. The closely watched Yangshan copper premium , a gauge of appetite for imports into key consumer China, increased to $210 a ton on Thursday, matching its record high.

Smelters in the country are facing a double squeeze of negative treatment charges and lower sulfuric acid prices.

Meanwhile, warehouse inventories outside the US have been drawn down as material was pulled into the country ahead of a potential tariff on imports of refined copper.

"These physical constraints should provide some support against weaker investor sentiment," Lang said.

Among LME metals, aluminium lost 0.54%, zinc lost 1.42%, lead lost 0.45%, nickel dipped 0.23% and tin gained 0.83%.

On the SHFE, aluminium nudged down only 0.04%, zinc lost 1.35%, lead was little changed, down only 0.03%, nickel rose 2.14% and tin dropped 3.45%.

SHFE inventories were down across the board this week, led by sharp drops in aluminium and lead .

($1 = 6.6693 Chinese yuan renminbi)