LONDON, Aug 19 Reuters Investors fleeing the copper market are likely to be sidelined for many months, leaving the field clear for physical players who expect demand in top consumer China and elsewhere to deteriorate over coming months and weigh on prices.

A fund buying frenzy, based on an expected shortage of copper relative to demand, sparked a rally on the London Metal Exchange LME earlier this year, which quickened as momentum traders entered the fray to lift prices to a record high above 11,100 a metric ton in May.

At the same time, commodity traders were buying on the LME to deliver against their commitments to sell copper on COMEX, part of CME Group.

However, copper has dropped nearly 20 since as persistently weak manufacturing activity led the physical market to reassert control, with consumers putting purchases on hold and producers and traders delivering surplus metal to LMEregistered warehouses.

Updates to demand and refined production have pushed the market to a surplus sooner than expected, said Macquarie analyst Alice Fox, who expects copper surpluses of 265,000 metric tons this year, 305,000 tons in 2025 and 436,000 in 2026.

Fox said prices may recover in the fourth quarter if exchange stocks are drawn down.

However, absent faster global growth boosting demand, the more sizeable surpluses in 2025 and 2026 mean this rally is likely to be shortlived, Fox said, adding that prices could fall back towards 8,000.

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