Copper prices have surged to their highest level in over a year, driven by concerns over global supply disruptions and the anticipation that lower interest rates will stimulate demand for the industrial metal. Benchmark copper futures on the London Metal Exchange surpassed $US10,500 a tonne, a level not seen since May 2024. These gains reflect growing market optimism surrounding copper’s near-term prospects.
The declaration of force majeure by Freeport-McMoRan at the Grasberg mine in Indonesia has exacerbated existing supply concerns. This event follows a series of supply setbacks across South America and Africa, further supporting the upward momentum in copper prices. The supply side issues combined with expectations of increased demand paint a bullish picture for the metal.
Adding to the positive sentiment, recent private sector jobs data in the United States has strengthened expectations that the Federal Reserve will cut interest rates. The ADP report, particularly significant given potential delays in government data releases, revealed an unexpected drop in payrolls for September. Lower interest rates typically benefit commodities by increasing consumption and weakening the US dollar.
As a result, a weaker dollar makes commodities more affordable for international buyers. Copper closed up 1.1 per cent at $US10,490.50 a tonne at 5.50pm in London. Other base metals also experienced gains, reflecting broad strength in the commodities market.
