Onome Amuge
Copper prices slipped, giving up some gains from a rally earlier in the week that had been fuelled by concerns over supply disruption at Indonesia’s Grasberg mine, the world’s second-largest copper producer.
Benchmark three-month copper on the London Metal Exchange fell 0.7 per cent to $10,189.50 a tonne, although it remains 2 per cent higher for the week and on track for its strongest weekly performance since June. Prices reached a 15-month peak of $10,485 a tonne on Thursday, driven by expectations of tighter supply after Jakarta ordered a suspension of operations at Grasberg to allow rescue teams to search for trapped workers following an accident.
Indonesia’s mining minister confirmed on Friday that the government had reached an agreement with Freeport Indonesia, a unit of US-based Freeport-McMoRan, to keep the mine closed temporarily. Grasberg is one of the most important sources of copper globally, accounting for about 4 per cent of annual supply.
Analysts at Macquarie said the stoppage would reduce the size of the copper surplus the bank had projected for 2025 and 2026, but not enough to tip the market into deficit.
“This should support higher prices in the short term versus our prior forecasts, although prices may struggle to stay above $10,000 a tonne,” said Alice Fox, commodities strategist at Macquarie.
A weakening Chinese yuan added further pressure, with the currency heading for its sharpest weekly decline against the dollar in two months. Because copper is priced in dollars, a weaker yuan raises costs for Chinese buyers, dampening demand in the world’s largest metals consumer. Markets in China will also be quieter this week as the country enters a national holiday from October 1 to 8, a period typically marked by slower activity.
In physical markets, copper inventories in warehouses tracked by the Shanghai Futures Exchange fell 6.6 per cent this week, while the Yangshan premium, which reflects appetite for imports into China, steadied at a one-month low of $53 a tonne.
Other base metals were also softer. Aluminium eased 0.2 per cent to $2,652 a tonne, zinc slipped 1.3 per cent to $2,886.50, lead fell 0.7 per cent to $2,001.50 and nickel dropped 0.8 per cent to $15,155. Tin bucked the trend, gaining 0.3 per cent to $34,500.
