Onome Amuge
Copper prices climbed above the closely watched $10,000-a-tonne threshold on Wednesday, buoyed by a weaker U.S. dollar and renewed speculation that the Federal Reserve will begin cutting interest rates next week.
Benchmark copper on the London Metal Exchange rose 0.8 per cent to $9,993 a metric tonne in London, having earlier touched $10,005. It was the third time in September that the industrial metal has tested the psychologically important level, which has historically drawn heavy technical trading.
The latest rally came after U.S. data showed producer prices rose 2.6 per cent in August compared with a year earlier, undershooting expectations for a 3.3 per cent gain. The softer-than-expected print suggested pipeline inflationary pressures remain subdued, bolstering the case for monetary easing.
Futures markets are now pricing in a quarter-point rate cut at the Fed’s September 17-18 policy meeting, with a non-negligible chance of a half-point move. Thursday’s U.S. consumer inflation data will be pivotal in shaping expectations.
The dollar edged lower on the back of the producer price report, making dollar-denominated commodities such as copper more affordable for buyers holding other currencies.
“Dollar weakness, at least early in September, will likely provide an element of support. But should the Fed catch markets off guard, a stronger dollar could usher in a price setback going into the second half of the month,” said Ed Meir, analyst at Marex.
Copper, widely used in power grids, construction and manufacturing, is particularly sensitive to global growth signals and shifts in U.S. monetary policy. Traders said the latest gains underscored the interplay between macro drivers and supply fundamentals.
On the supply side, sentiment was buoyed by a temporary production halt at Freeport-McMoRan’s Grasberg mine in Indonesia, one of the world’s largest copper operations. The stoppage, though not expected to be prolonged, added to jitters over an already tight supply backdrop.
Analysts said disruptions at key producers, alongside low visible inventories, could amplify price volatility if demand rebounds. Copper stocks on the LME remain at historically lean levels, intensifying market sensitivity to even minor shocks.
Attention is also turning to China, the world’s top consumer of industrial metals, which is due to release its monthly loan and credit aggregates between September 10 and 15.
Analysts expect Chinese credit growth to have accelerated in August from July, reflecting targeted stimulus measures. “A stronger financing print would reinforce hopes that Beijing’s incremental support is beginning to filter through to real demand,” said one metals trader in Singapore.
Still, doubts persist over the durability of China’s recovery amid a fragile property sector and patchy industrial output. “Copper bulls will want to see consistent evidence of credit transmission to end-use demand,” said another analyst.
Beyond copper, zinc markets have shown signs of strain. LME-registered zinc stocks have slumped nearly 75 per cent since mid-April to 50,825 tons, with a further 15,375 tons earmarked for delivery out of the exchange system.
The drawdown has triggered a pronounced backwardation, with spot zinc trading at an $18 premium to three-month futures, reflecting near-term scarcity. Prices for three-month zinc rose 0.6 per cent to $2,874 a tonne on Wednesday.
Other base metals were mixed. Aluminium eased to $2,621 a tonne, lead dipped 0.1 per cent to $1,974, tin climbed 1.7 per cent to $34,595, and nickel edged slightly lower to $15,095.
