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Commodities

COPPER IS ON A ROLL DUE TO SUPPLY DISRUPTIONS

ADMIN || 26th September 2025

Copper prices jumped Wednesday after Freeport McMoRan Inc. said force majeure was declared on contracted supplies from its giant Grasberg mine (world’s No 2-Copper mine) in Indonesia. Copper for delivery in three months rose as much as 2% to $10,172 a ton on the London Metal Exchange. Currently they are trading at $10,259 levels.

In copper markets, $10,000 was seen as a sort of price ceiling that the metal failed to breach for any length of time. Now supply disruptions are making that threshold look more like a floor.

It’s the latest confirmation for commodity investors that supply factors are in the driving seat. Prices have extended gains above $10,400 after Freeport’s force majeure at Grasberg, a mine responsible for about 2%-3% of global output. Coming on top of other setbacks, such as Hudbay shuttering its Constancia mill in Peru and Codelco’s fatal accident in Chile, it’s a sign of how little slack exists in the market.

Europe and Asia look particularly vulnerable to supply squeezes, given that vast amounts of copper were pulled into the US earlier this year on fear of tariffs. While European consumption is still anaemic, a key proxy for Chinese import demand -- the Yangshan copper premium -- has been climbing since July. Importers now pay about $53 a ton over LME prices. That’s still only half this year’s peak above $100, but the upward trend signals firmer buying interest and suggests tightness could intensify should that premium climb.

Other than in the US, copper stockpiles are low but demand from electrification and technology remain intact. Round numbers matter for metals prices because they act as psychological thresholds that often unleash momentum flows. Without supply improvements, the clean break of the $10,000 price tag could pave the way for a further rally.

Grasberg accounts for roughly 3% of global mined copper this year and nearly 30% of Freeport’s own copper output, so any multi-quarter outage punches a hole in concentrate availability just as smelters are already short feedstock.

Alongside another supply disruption in Peru (where Hudbay shuttered its Constancia mill amid protests), thin non-US inventory levels and tight concentrated supply lines, fundamentals are set to support copper prices as the long-term secular electrification trend keeps demand strong.

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