Onome Amuge
Copper prices pushed back above the closely watched $10,000-a-tonne threshold on Thursday, buoyed by a softer dollar and fresh signs of supply disruptions that reinforced investor optimism about the market’s medium-term outlook.
Three-month copper on the London Metal Exchange rose 0.2 per cent to $10,029 a tonne, marking the second consecutive session above the symbolic level. The move follows several failed attempts earlier this year to break decisively higher, after the metal touched $10,164.50 in March, its strongest in more than eight months.
The rally came as the US dollar slipped against a basket of major currencies after August inflation data came in hotter than expected and weekly jobless claims ticked higher. Investors interpreted the figures as boosting the case for the Federal Reserve to resume cutting interest rates next week, easing financial conditions and lifting industrial demand.
A weaker greenback makes commodities priced in dollars cheaper for buyers using other currencies, often providing support to metals markets.
“Copper’s fundamentals remain constructive, but the softer dollar is giving an added push. Miners are experiencing more disruptions to their production than they had anticipated, combined with the fact that capex going into copper mines is just not enough to keep up with growth in metal demand,” said Nitesh Shah, commodities strategist at WisdomTree.
Adding to bullish sentiment were fresh signs of production hiccups. Grasberg, one of the world’s largest copper mines in Indonesia, halted operations this week following an underground incident, raising concerns about tighter short-term supply.
Mining companies globally have faced difficulties in maintaining stable output, from labour disputes in Latin America to power shortages in Africa. Meanwhile, years of underinvestment have left the sector ill-prepared for the expected surge in copper demand from electrification and renewable energy transitions.
“Supply growth is not keeping pace with demand projections. This structural imbalance is likely to keep copper well-supported, even if near-term economic data is mixed,” Shah noted.
Still, many investors remain wary of copper’s ability to sustain gains above $10,000. Previous rallies this year faltered as traders weighed concerns that US tariffs and slowing Chinese property construction could dampen demand.
Shah said the picture is more complicated than many expected. “The net effect may be that metal demand doesn’t really fall that much because of all the other stimulus activity,” he said, pointing to infrastructure spending and clean-energy investments in China, the US and Europe.
On the Shanghai Futures Exchange, the most-traded copper contract gained 0.6 per cent to 80,130 yuan ($11,251) a tonne, echoing the upbeat sentiment on the LME.
The bullish tone spread across the industrial metals complex. LME aluminium climbed 1.6 per cent to $2,666 a tonne, zinc rose 0.4 per cent to $2,898, lead added 0.1 per cent to $1,988, and tin gained 0.3 per cent to $34,705. Nickel bucked the trend, slipping 0.1 per cent to $15,130.
