On February 5, 2026, China’s commodity market continued its recent correction trend. Affected by factors such as external market fluctuations and the rebound of the US dollar index, multiple varieties continued to weaken, among which internationally priced commodities performed particularly weakly, echoing the volatility of the precious metals market. As of midday today, most varieties in China’s commodity futures market fell, with only a very small number of varieties such as caustic soda and fiberboard rising slightly, continuing the adjustment pattern since February.
Looking back at the recent trend, a large-scale limit-down market occurred in China’s commodities on February 2: the Shanghai Gold 2604 contract plummeted 15.73%, and 12 commodity futures varieties including Shanghai Silver, Platinum, Palladium, Copper and Aluminum hit the limit down collectively. Such a large-scale collective limit-down trend is very rare. The core inducement of this correction is the “Warsh Shock”. After Kevin Warsh was nominated as the Federal Reserve Chairman on January 30, his policy propositions subverted market expectations of monetary easing, promoting a phased rebound of the US dollar index. Commodities are mostly negatively correlated with the US dollar index, thus triggering a systemic correction.
In terms of varieties, internationally priced commodities fell significantly. Industrial metals such as Shanghai Copper and Shanghai Aluminum, as well as petrochemical varieties such as INE Crude Oil Futures, all weakened synchronously with the external market. Among them, LME Copper has fallen about 13.4% since its high on January 29, and the decline of the main Shanghai Copper contract is basically the same as that. In contrast, agricultural products dominated by domestic pricing and with weak financial attributes performed relatively resilient: the intraday declines of the main contracts of Soybean and Rapeseed Futures were both less than 0.5%, and the decline of the Hog Futures 2603 contract was only 0.04%. The industry reminds that the current commodity market is greatly affected by the external market, and the volatility risk is increasing. Relevant practitioners need to do a good job in risk hedging.
