Copper prices surged to unprecedented levels on Monday amid concerns over potential shortages and China’s commitment to increase domestic demand next year. However, a stronger dollar following the start of U.S. trading caused prices to fall back.
Benchmark copper on the London Metal Exchange remained stable at $11,622 per metric ton at 1702 GMT, down from an earlier high of $11,771 per ton, marking a 30% increase this year.
Analysts predict that the U.S. Federal Reserve will adopt a “hawkish cut” this week, where the language of the statement and Chair Jerome Powell’s press conference will suggest a higher threshold for future rate cuts.
This is likely to strengthen the U.S. dollar, which, when it appreciates, makes dollar-denominated metals more costly for holders of other currencies.
Traders noted China’s plans to boost domestic demand and support its economy with more proactive policies in 2026 as positive news for industrial metals.
Expected copper market deficits are partly due to disruptions in mine supply in recent years, including an incident at Freeport McMoRan’s massive Grasberg mine in Indonesia.
Global supplies have also tightened as traders have been sending copper to the United States since March, driven by higher Comex prices ahead of U.S. President Donald Trump’s proposed import tariffs.
Refined copper was eventually exempted from the 50% import tariffs that took effect on August 1, but U.S. levies on the metal used in power and construction industries are still under review, with an update expected by June.
Copper inventories in Comex-approved warehouses hit a record high of 436,853 short tons or 396,306 metric tons on Friday, up over 300% since March.
Macquarie analysts estimate there are approximately another 335,000 tons off-exchange in the U.S.
“This is lower than our previous estimate of around 420kt due to more metal being moved to Comex warehouses and lower November imports compared to the usual pre-Section 232 level,” Macquarie stated.
“Considering some of this to be the transfer of existing stocks, it suggests a market surplus of 400,000 to 600,000 tons year to date. The issue is that most of this is in the U.S., causing artificial tightness elsewhere.”
In other metals, aluminum dropped 0.4% to $2,886 per ton, zinc rose 0.6% to $3,117, lead decreased 0.2% to $1,997, tin fell 0.5% to $39,850, and nickel declined 0.5% to $14,865.
