Copper Slips as China Demand Slows

Copper futures in the US traded near $6.70 per pound, remaining close to the record high of $6.80 touched on September 8th, amid sharp setbacks to global supply and robust demand from electrification. Operations were suspended without a timeline for restart at BHP's Escondida copper mine in Chile—the largest in the world—after an accident resulted in the death of a worker, raising the risk of strikes while union members were already in contract negotiations with the mining giant. The disruption magnifies supply pressures as multiple refineries in China schedule maintenance at the start of the fourth quarter. Consequently, the copper prompt spread on the LME widened to its highest level so far this month. Meanwhile, manufacturing activity in the US surged during September, reflecting solid demand for the base metal. Longer-term demand is also underpinned by soaring orders for global electrification projects, including data centers in the US and energy storage infrastructure in China.

Copper futures fell to around $6.66 per pound on Friday, touching one-week lows as a stronger US dollar and rising Treasury yields weighed on prices amid expectations that the Federal Reserve will continue raising interest rates to combat inflation. Higher borrowing costs could eventually slow global economic growth, weighing on demand for industrial metals. Still, copper remains supported by persistent supply risks, with union workers at Escondida, the world’s largest copper mine in Chile, calling for a strike after rejecting a wage offer. Metals trader Sprott Asset Management also said global mined copper output could decline this year for the first time since 2017, while disruptions at major mines in Indonesia and the Democratic Republic of Congo have reduced expected annual production by an estimated 600,000 tons. On the demand side, consumption remains strong across power grids, AI data centers and the defense sector.

Copper futures hovered around $6.70 per pound on Thursday, below record levels as the dollar strengthened on robust US economic data that reinforced expectations for further Federal Reserve rate hikes. A stronger dollar makes greenback-priced commodities such as copper more expensive for overseas buyers. Still, the metal remains supported by persistent supply risks, with BHP Group announcing that mining operations had been suspended at the giant Escondida mine in Chile following the death of a worker. Metals trader Sprott Asset Management also said global mined copper production could decline this year for the first time since 2017, while disruptions at major mines in Indonesia and the Democratic Republic of Congo have reduced expected annual output by an estimated 600,000 tons. On the demand side, consumption remains robust across power grids, AI data centers and the defense sector, while the recent rally in technology and AI stocks has further strengthened the demand outlook.