Copper Price (HG=F) at $4.65 Rallies on Grasberg Mine Halt and Chinese Demand Recovery

Copper Prices (HG=F) Rally Toward $10,000 Amid Supply Shocks and Chinese Demand Uncertainty

Supply Disruptions at Grasberg and Chile Keep Pressure on Copper

Copper (HG=F) prices are back near the $10,000 per metric ton threshold as one of the market’s biggest risks—supply reliability—intensifies. Freeport-McMoRan (NYSE:FCX) confirmed that operations at the Grasberg mine in Indonesia remain suspended after a mudflow trapped seven workers underground, cutting off one of the world’s largest sources of mined copper. Grasberg alone produced 816,466 tonnes in 2024, accounting for 3.6% of global output. With production halted and no immediate timeline for restoration, COMEX copper rose to $4.6788 per pound, its highest level in more than a month, while LME futures touched $10,981.20 per ton, a six-month high. Analysts note that any prolonged closure at Grasberg could tighten the market sharply, especially as Chile’s state miner Codelco also warns that national output could stagnate near 5.5 million tonnes annually due to falling ore grades, deeper mining operations, and rising costs.

China’s Imports and Demand Trends Set the Tone

Despite softer monthly import data, China continues to anchor copper demand. Imports of unwrought copper slipped to 425,000 tonnes in August from July’s levels but still marked a year-over-year increase. Meanwhile, copper concentrate inflows surged to 2.76 million tonnes, the highest in four months, highlighting China’s determination to secure feedstock even as treatment charges fall. The Yangshan premium climbed 1.8% to $58 per ton, its strongest in three months, showing renewed appetite for refined copper imports. At the same time, easing factory-gate deflation and stronger-than-expected industrial activity in August provided the first signs of stabilization in China’s economy after six months of weakness. This improved backdrop could reinforce copper consumption in September, with analysts projecting continued strong appetite for concentrates due to weaker domestic production capacity.

US Dollar, Fed Policy and Macro Impact on HG=F

The dollar index’s rebound to 97.7 weighed slightly on intraday copper trading, trimming gains and sending COMEX December futures down 0.2% to $4.65 per pound. Yet macro drivers remain tilted in copper’s favor. US CPI rose 2.9% year-over-year in August, in line with expectations, but a weakening labor market—with jobless claims at their highest since 2021—has markets fully pricing a 25-basis-point Fed rate cut on September 17, with growing bets for multiple cuts through December. Lower rates globally increase liquidity, support risk assets, and typically boost commodities like copper. Investors are also watching correlations: the copper-to-gold ratio is at record lows, historically a signal that copper may “catch up” as equities extend rallies. Strategists note that when copper trades at a discount to gold in relative terms, subsequent rebounds have coincided with strong global growth phases.

China’s Copper Rod Sector Data Signals Mixed Consumption

August copper rod production in China totaled 1.0799 million metric tons, up 0.93% month-over-month. Cathode rod output rose 2.67% to 923,000 tons, while secondary copper rod production slumped 8.25% to 156,900 tons due to policy disruptions in Jiangxi and Anhui. Operating rates in cathode rods reached 68.37%, higher than July but 5.72 percentage points lower year-over-year as elevated copper prices curbed demand. Secondary rod utilization fell to 28.33% but remained higher than a year ago thanks to partial recovery in other provinces. Processing fees for 8mm copper rods in East China edged up to 485 yuan/ton, a modest improvement from July, though overall demand from downstream sectors like wire and cable remains tepid. September forecasts point to cathode rod operating rates climbing to 71.93% on seasonal stocking, while secondary rods could dip to 27.47% as policy constraints persist. End-use industries tell a nuanced story: the wire and cable sector is forecast at 72.46%, essentially flat, while enamelled wire and copper foil are projected to rise modestly due to pre-holiday stocking.

Copper as the New Growth Proxy

Cross-asset strategists argue that copper is emerging as “the new gold.” The metal’s breach of $10,000 a ton echoes March highs and underscores its role as both a global growth barometer and a structural beneficiary of electrification. Demand is surging from two megatrends: clean energy transition and AI-driven electricity usage. EV charging stations, wind turbines, and grid expansion all require heavy copper input, while advanced computing and AI data centers amplify power consumption, keeping copper in the spotlight. Anglo American’s recent deal with Teck Resources strengthens global supply chains, yet industry consensus suggests structural deficits will persist. Unlike gold, where investors flee to safety, copper is being accumulated as a strategic resource tied to the future of growth and technology.

Short-Term Technical Outlook for HG=F

Technically, HG=F has tested $4.62, with bulls eyeing $4.75 as the next resistance zone. A close above $4.75 would open the door toward $4.90, while failure to sustain momentum could drag prices back to the 55-day moving average near $4.26. On the downside, a decisive break below $4.38 would expose $4.20 and ultimately the $4.00 psychological support. Inventories at the LME stand at 155,825 tons, with recent cancellations signaling tighter nearby supply, further underpinning bullish sentiment. Still, traders caution that a strengthening US dollar could cap near-term rallies.

Verdict: Copper (HG=F) a Buy on Dips

The convergence of constrained supply from Grasberg and Chile, seasonal demand from China, and macro tailwinds from Fed easing create a bullish setup for copper. With spot near $4.65 per pound and LME levels at $10,981 per ton, the market looks primed for a sustained move higher if resistance levels are cleared. Elevated prices may weigh on downstream consumption, but structural demand from electrification and infrastructure points to resilience. Based on fundamentals and technicals, copper (HG=F) is a Buy on dips, with targets at $4.75 and $5.00 into Q4 2025.

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