Copper surged to a 14-month peak, buoyed by investors gravitating towards this key industrial metal amidst escalating supply concerns and optimism over a worldwide demand resurgence.
The metal’s prices soared by as much as 1.5% on Thursday, fueled further by Federal Reserve Chair Jerome Powell’s dovish remarks. This momentum builds on a rally that kicked off in early February, driven by rapidly increasing supply risks.
Significant disruptions in major mining operations have forced smelters to pay unprecedented prices for raw ore. In China, home to over half of the globe’s refined copper production, factories are inching towards a collective decision to reduce output.
Concurrently, emerging signs of recovery in the global manufacturing sector are bolstering confidence that a tighter market might catapult copper to unprecedented highs.
However, concerns persist regarding demand within China’s real estate and other critical sectors, along with a seasonal dip in activities that’s extending beyond what optimists had anticipated. Yet, beyond China, there is rising optimism that India’s extensive infrastructure spending and the global surge in AI interest could significantly expand demand.
On the supply front, skepticism remains over whether Chinese smelters will enact substantial production cuts. Nevertheless, the accumulation of production risks at mining sites worldwide continues. Ivanhoe Mines reported a 6.5% decrease in quarterly production at the vast Kamoa-Kakula mine in the Democratic Republic of Congo on Wednesday. Additionally, drought conditions in Zambia threaten to derail the country’s ambitious plans to boost mining output.
Copper’s price increased by 1.1% to $9,361 per ton on the LME by 5:21 p.m. in London, while aluminum saw a 0.8% rise, and zinc grew by 3.4%. Chinese markets remain closed for holiday observances.
The upcoming release of US nonfarm payrolls data on Friday could further solidify forecasts regarding the Federal Reserve’s timeline for interest rate reductions.
