Copper climbs as Grasberg mine accident deepens supply fears

Onome Amuge

Copper prices rose on Monday, extending recent gains as supply disruptions at a major Indonesian mine and a weaker US dollar underpinned sentiment in the market for the industrial metal.

Benchmark three-month copper on the London Metal Exchange gained 0.8 per cent to $10,259.50 a tonne, building on a 3.6 per cent rally this month. Prices touched a 15-month peak of $10,485 last week after analysts pared back production forecasts for 2025 and 2026 in the wake of an accident at the Grasberg mine.

The world’s second-largest copper deposit, Grasberg halted operations on September 8 following a fatal mudslide at one of its biggest underground sites. Operator Freeport-McMoRan has declared force majeure on certain contracts, a move that analysts said would tighten the global concentrate market.

“We remain supportive on copper price prospects following the tightening of the copper concentrate market on the disruption and force majeure at Grasberg,” said Sudakshina Unnikrishnan, analyst at Standard Chartered.

The supply shock coincides with renewed weakness in the dollar, pressured by concerns over a potential US government shutdown should Congress fail to approve a budget by the end of the fiscal year on Tuesday. Because copper is priced in dollars, the softer currency makes the metal more affordable for buyers using other units.

Chinese demand, the single largest driver of the copper market, remains a swing factor. Beijing said it was targeting average production growth in non-ferrous metals of 1.5 per cent this year and next, compared with 5 per cent across 2023 and 2024. Industrial profits in China returned to growth in August, though factory activity is still expected to have contracted in September, with purchasing managers’ index data due on Tuesday.

Other base metals also advanced on the LME, with aluminium up 0.5 per cent to $2,669 a tonne, zinc climbing 1.1 per cent to $2,918.50, and tin adding 0.4 per cent to $34,615. Lead slipped 0.3 per cent to $1,997, while nickel gained 0.4 per cent to $15,230.

The market’s attention is now focused on the duration of Grasberg’s shutdown and whether China’s tentative industrial recovery can provide enough demand support to sustain copper’s rally into the final quarter.

Onome Amuge

Onome Amuge serves as online editor of Business A.M, bringing over a decade of journalism experience as a content writer and business news reporter specialising in analytical and engaging reporting. You can reach him via Facebook and X