LONDON: Copper hit record highs on Monday as concerns about future shortages and top consumer China’s pledge to boost domestic demand next year dominated the mood, but a firmer dollar after the start of US trading saw prices retreat.
Benchmark copper on the London Metal Exchange was little changed at USD11,622 a metric ton at 1702 GMT, down from an earlier peak of USD11,771 a ton, a gain of 30 percent this year.
Analysts expect the US Federal Reserve to make a “hawkish cut” later this week where the language of the statement and Chair Jerome Powell’s press conference point to a higher bar for further rate reductions.
This is expected to support the US currency, which, when it rises, makes dollar-priced metals more expensive for holders of other currencies.
Traders highlighted China saying it will expand domestic demand and support the broader economy with more proactive policies in 2026 as a positive for industrial metals.
Expectations of copper market deficits are partly due to mine supply disruptions in recent years, including an accident at Freeport McMoRan’s giant Grasberg mine in Indonesia.
Supplies have also tightened in the rest of the world as traders have been shipping copper to the United States since March due to higher prices on Comex ahead of US President Donald Trump’s planned import tariffs.
Refined copper was ultimately given an exemption from the 50 percent import tariffs that came into force on August 1, but US levies on the metal used in the power and construction industries remain under review, with an update due by June.
Copper inventories in the Comex-approved warehouses a record high at 436,853 short tons or 396,306 metric tons on Friday, are up more than 300 percent since March.
Analysts at Macquarie estimate there is roughly another 335,000 tons sitting off-exchange in the US
“This is lower than our prior estimate of around 420kt due to more metal having transferred to Comex warehouses and November imports being lower than the usual pre-Section 232 level,” Macquarie said.
“Allowing for some of this to be the transfer of existing stocks, it points towards a market surplus of 400,000 (to) 600,000 tons year to date. The issue is that most of this is in the US, creating an artificial tightness elsewhere.”
In other metals, aluminium fell 0.4 percent to USD2,886 a ton, zinc gained 0.6 percent to USD3,117, lead was down 0.2 percent to USD1,997, tin slipped 0.5 percent to USD39,850 and nickel ceded 0.5 percent to USD14,865.
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