Copper prices declined on Thursday as the US dollar strengthened against most major currencies and investors assessed China’s regulatory moves targeting the country’s copper smelting industry.

A state-run Chinese media outlet reported Thursday that China, the world’s largest copper smelter, is exploring ways to tighten oversight on capacity expansion, as record-low treatment charges have eroded company profits.

Chen Xuexun, vice president of the China Nonferrous Metals Industry Association, said during a Wednesday meeting that low treatment and refining charges (TC/RCs) represent the “most prominent” challenge facing the sector.

He added that fees paid by miners to smelters have been hurt by what is known in China as “involution-style competition” — an intense rivalry so destructive it undermines the industry itself. This follows massive smelting capacity expansions that have outpaced mined copper supply, constraining concentrate availability.

Chen stated: “Involution-style competition has harmed both industry and national interests, so copper companies must firmly oppose it. The association has proposed specific measures to strictly control capacity expansions.”

In early July, Chinese policymakers pledged to tackle “disorderly price competition,” raising hopes of supply-side reforms in industries plagued by overcapacity. That announcement pushed up prices of commodities such as lithium and coal at the time.

However, copper prices barely moved in July, even as output fell 2.5% from a record high in June.

Treatment charges have since plunged to record lows, with some Chinese smelters agreeing to process copper for Chile’s Antofagasta at zero fees under a long-term contract. Spot TC/RCs have remained in negative territory since last December.

Risks facing Chinese smelters — also the world’s largest copper consumers — have grown after Freeport-McMoRan cut its copper production outlook in Indonesia, a move analysts said contributed to higher global copper prices.

Three-month benchmark copper on the London Metal Exchange rose 1.02% to $10,442 per metric ton by 10:09 GMT on Thursday, after hitting its highest level in 15 months earlier in the session.

Attendees at Wednesday’s industry meeting included major Chinese smelters such as Jinchuan Group, Jiangxi Copper, Tongling Nonferrous, China Copper, Daye Nonferrous, China Minmetals, and Zijin Mining, according to the state-backed China Nonferrous Metals News.

Meanwhile, the dollar index rose 0.5% to 98.3 by 15:43 GMT, touching a high of 98.3 and a low of 97.7.

In trading, December copper futures fell 1.1% to $4.76 per pound as of 15:37 GMT.

Bitcoin fell below $112,000 on Thursday after a brief recovery, with investors remaining cautious ahead of key US economic data, following signals from Federal Reserve officials that they would take a cautious approach to future rate cuts.

The world’s largest cryptocurrency slipped 0.7% to $111,786.6 by 02:28 AM ET (06:28 GMT).

Bitcoin had seen a limited rebound on Wednesday, approaching $114,000, but failed to sustain momentum.

The digital asset dropped sharply earlier this week when a wave of liquidations wiped out about $1.5 billion in long positions across crypto exchanges.

Reports said weak market liquidity, combined with leveraged bets, deepened the sell-off that pushed Bitcoin from above $115,000 to the $112,000 range. This weighed on broader digital asset sentiment and left traders wary of further volatility.

Traders Await US Jobs and Inflation Data

Fed Chair Jerome Powell said earlier this week that there is “no risk-free path” in setting monetary policy, warning that easing too quickly could fuel inflation, while moving too slowly could hurt job growth.

Other Fed officials reinforced this cautious stance in separate remarks, stressing that any further steps toward monetary easing will depend heavily on incoming economic data.

These comments curbed risk appetite across financial markets, with investors now awaiting fresh US data for clearer direction.

Weekly jobless claims and a final reading on second-quarter GDP are due Thursday. On Friday, the August Personal Consumption Expenditures (PCE) price index report — the Fed’s preferred inflation gauge — is expected to show core inflation steady at about 2.9% year-over-year, above the Fed’s 2% target.

Oil prices fell on Thursday, giving up the gains made in the previous session when they reached a seven-week high. The decline came as some investors booked profits following a drop in US equities, amid expectations of weaker winter demand and the resumption of Kurdish supplies.

Brent futures fell by 49 cents, or 0.7%, to $68.82 a barrel by 08:25 GMT, while US West Texas Intermediate (WTI) crude slipped 54 cents, or 0.8%, to $64.45.

Both benchmarks had climbed 2.5% on Wednesday to hit their highest levels since August 1, supported by a surprise weekly drawdown in US crude inventories and concerns that Ukrainian attacks on Russian energy infrastructure could disrupt supplies.

Giovanni Staunovo, commodity analyst at UBS, said: “We are seeing a market generally shifting toward risk aversion,” adding that two consecutive days of losses in US equities were weighing on oil prices.

Expectations of additional supply also pressured the market, with more flows anticipated soon from Iraq and Kurdistan. Priyanka Sachdeva, senior analyst at Phillip Nova, noted: “The return of Kurdish supplies revives fears of an oversupply scenario, pushing prices lower after nearing a seven-week high.”

Oil flows from Iraq’s Kurdistan region are expected to resume within days, after eight oil companies reached an agreement on Wednesday with the federal government and the Kurdish regional government to restart exports.

While concerns about Russian supply disruptions persist, Haitong Securities said in a report that another factor behind oil’s recent resilience was the absence of strong pressure from supply-demand fundamentals. The report added that with peak demand season gradually ending, prices have yet to reflect expectations of rising oversupply pressures.

Highlighting investor caution on demand, JPMorgan analysts said on Wednesday that US air passenger data for September showed only a marginal 0.2% year-on-year increase, compared with 1% growth in each of the two prior months.

They added: “Similarly, gasoline demand in the US has begun to decline, reflecting a broader trend of slowing travel patterns.”

The US dollar has not advanced this week on the back of war drums or geopolitical tensions. Instead, it continues to edge higher for more ordinary but equally persistent reasons: there simply hasn’t been enough “fuel” for the bears to justify short positions at the week’s opening levels. Traders hoping for a flow of weak US data to support dollar selling instead found an “empty plate,” and that absence alone has underpinned the greenback.

One-week G10 funding rates still grant the dollar a 4.14% annualized yield — hardly an incentive to stay short. (This explains why players have remained in narrower ranges over the past two weeks.) Adding to this, US housing data showed new home sales jumping back to early-2022 levels, forcing the market to acknowledge that slowdown is not yet the main narrative. Even Fed Funds pricing — which bottomed in mid-September — has ticked up by 5 basis points. A modest move, but enough to show that the “cut 50 bps now” camp is not in control.

Today’s data slate includes jobless claims and existing home sales. Jobless claims are expected to fall again to around 230,000, erasing the earlier spike to 264,000 (later revealed to have stemmed from fraud in Texas). A steady labor market is not the kind of feed bears can use against the dollar. Existing home sales may come in weaker — consensus at 3.95 million units annually — but that is unlikely to draw much attention after the “surge” in new homes.

Meanwhile, eight Fed speakers are lined up like actors on a crowded stage. Steven Miran is expected to reprise his familiar role as an “ultra-dovish hawk,” pushing for faster and deeper cuts. But the market knows his script well; his voice alone won’t move the dollar unless a broader “chorus” of Fed officials joins in.

The dollar index (DXY) hovers near 98, like a ship stuck in still waters. Without softer US data to provide the bears with wind, the dollar remains stagnant, frustrating those who bet on its decline.

As for the euro, its latest slide looked more like “local data disappointment” than genuine dollar strength. German Ifo readings burst the bubble of optimism, reminding markets that “fiscal stimulus” often resembles creative accounting more than fresh spending. Europe may find firmer ground later, but patience is required. With no ECB headlines today, EUR/USD stays at the mercy of US flows. A break below 1.1725 could open the way to 1.1675, though buyers remain “lurking in the shadows.”

The Japanese yen stays in the market’s crossfire. It managed a modest rebound after BoJ minutes reiterated willingness to raise rates “someday,” but that was hardly new. The spotlight instead fell on “Japanese political kabuki,” leaving the yen hostage to domestic developments. USD/JPY held its rebound, but its technical outlook remains bleak unless the US delivers a string of stronger-than-expected data.

For now, the US dollar retains the upper hand not because it has seized power with overwhelming force, but because the “opposition” is too weak and divided to mount a serious challenge. In markets, inertia can sometimes be the most powerful force of all.