- Trading volume and open interest on China’s metals exchanges soared to record highs in January.
- Traders have been betting record amounts of money on China’s metals markets, expecting a continued rally in the prices of base metals and lithium.
- ING’s Eva Manthey: China has become the center of short-term?term price formation in metals.
Trading volume and open interest on China’s metals exchanges soared to record highs in January, fueled by retail investors flocking to what they believe are the next market winners—precious and industrial metals.
So many bullish positions were open at the start of the year that the first negative signals sent global metals markets crashing from record highs and whipsawing in violent swings.
At the end of 2025 and the start of 2026, speculators held record-high open interest in the base metals , , , , , and aluminum traded on the Shanghai Futures Exchange, and near-record open interest in battery metal lithium on the Guangzhou Futures Exchange.
Traders have been betting record amounts of money on China’s metals markets, expecting a continued rally in the prices of base metals and lithium. A large part of the speculative longs came from retail investors, and the metals mania gripped global markets, too.
Fundamentals in metals markets still matter, but the outsized positioning and the momentum have more prominent roles and lead to spikes to record-highs and subsequent violent corrections, analysts say.
In China, regulators have sought to rein in the speculation mania with frequent tightening of the rules. From platinum to lithium to nickel and tin, the Shanghai Futures Exchange and the Guangzhou Futures Exchange have raised the daily price limit ranges, speculative trading margins, and hedging margins.
In fact, the two exchanges combined have issued as many as 38 circulars to limit the frenzied flocking into precious, industrial, and energy transition metals, Reuters columnist Andy Home notes.
The Shanghai Futures Exchange saw record volumes in aluminum, copper, nickel, and tin futures traded in January, data from the exchange compiled by Home showed.
The mania also spread to markets outside China and triggered violent corrections at the end of January and early February.
China has become the center of short?term price formation in metals, ING commodities strategist Ewa Manthey said in a Friday note.
“Fundamentals still matter but this shift means that positioning and momentum play a bigger role, leading to more volatility,” the strategist added.
China is now growing its influence on the metals futures markets, on top of dominating for years the physical demand for metals commodities. The rush by retail investors to metals has contributed to the whipsaw in metals markets in the past two weeks.
“Metals – both base and precious – have become a more prominent alternative investment amid heightened economic and geopolitical uncertainty,” ING’s Manthey noted.
China’s stricter regulations and the higher margin requirements have tempered the market frenzy, to an extent, but they haven’t changed the broader trend of increased speculative participation across metals contracts in Shanghai, the strategist said.
“While longer-term fundamentals still anchor prices, the growing influence of positioning means sharper moves, higher volatility and a greater risk of abrupt corrections as sentiment or policy shifts,” Manthey said.
and also surged in the three months to the end of January.
“The move was largely fuelled by a wave of speculative buying from China, from retail traders to larger equity funds rotating into commodities, with fresh flows pushing prices to extreme levels,” Manthey wrote in a separate note last week.
And when the jumped on the last trading day in January as President Donald Trump nominated the most hawkish candidate for the next Fed chair, gold and silver prices plunged as the investors who had bet on a weakening dollar took to profit-taking.
Major macro trends and speculative positioning will drive the near-term metals markets, analysts say.
China’s Lunar New Year holiday on February 17 will also impact markets in the immediate term.
“From a metals demand perspective, both industrial and precious, China’s upcoming Lunar New Year holiday – which sees key exchanges closed for more than a week – may weigh on prices as traders and speculators reduce exposure ahead of an expected seasonal pickup in early March,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a Friday note.
