(Dec 10): Copper climbed back towards a record, amid fresh warnings that the market will face sizable shortages as mines fail to keep pace with demand.
Prices rose as much as 1.6% to US$11,666 a tonne on the London Metal Exchange (LME), rebounding from a decline in the previous session, when prices pulled back from an all-time high set on Monday.
Copper — a metal critical for electrification and the energy transition — has gained more than 30% on the LME this year. A series of mine outages have tightened supply, and there are growing expectations that a surge in US imports in anticipation of potential tariffs will fuel shortages moving into next year.
Copper’s rally has come despite a recent slowdown in Chinese demand, and there were fresh signs of stress in the country’s manufacturing sector on Wednesday as data showed producer prices fell for a 38th straight month. Still, many investors are bullish on copper’s long-term prospects as usage accelerates in renewables, electric vehicles and data centres.
“We believe a period of higher prices is needed to spur investment in new copper production, and the mining industry struggles to build new supply,” RBC Capital Markets said in a note. “The interplay of AI-driven data center growth, EV expansion, and a global shift towards dovish economic policy sets up a strong case for copper demand.”
See also: Silver heads for weekly gain of about 10% in speculative surge
Investors across financial markets expect the Federal Reserve to deliver a quarter-point interest-rate reduction later on Wednesday, and a key focus will be on how chair Jerome Powell describes the central bank’s views on growth, inflation and borrowing costs for next year.
Kevin Hassett, the frontrunner in US President Donald Trump’s search to replace Powell as Fed chair, said on Tuesday that he sees plenty of room to substantially lower rates.
Copper rose 1.3% to US$11,635 a tonne as of 12.39pm local time on the LME. Other metals including aluminium and zinc also edged higher.
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