Copper Price (HG=F) at $9,963 Faces Fed Policy Tailwinds and Chinese Supply Surge

Copper (HG=F) Trades Near $9,963 as U.S. Fed Shift and Chinese Output Shape Market Direction

Copper prices have retraced from their 15-month high of $10,192.50/mt earlier this week, with London Metal Exchange contracts now around $9,963/mt, down 1.6% in official open-outcry trading. The 21-day moving average provides a floor at $9,910/mt, but traders are reducing exposure ahead of the Federal Reserve’s latest rate decision. Futures positioning shows a significant reduction in long exposure after tariff-related shocks earlier in the summer, leaving the market highly sensitive to policy catalysts and Chinese industrial demand signals.

Fed Rate Cut and Dollar Weakness Provide Support for HG=F

The Federal Reserve’s quarter-point cut has traders anticipating a potential easing cycle. With the U.S. dollar already down 10% year-to-date, copper, quoted in dollars, receives natural tailwinds from a softer greenback. Market sentiment is that if the Fed signals two to three cuts in the next 12 months, copper could retest $10,200/mt quickly. However, if rate guidance turns cautious, the commodity may remain capped in the $9,500–$9,950/mt range.

China’s Production Surge Adds Pressure on Supply-Demand Balance

China, the world’s top consumer, reported a 15% year-on-year rise in copper production in August, dampening near-term bullish momentum. Physical markets show weaker bids from Chinese buyers after the recent rally, with “teapot” refiners stepping in only modestly. Inventories in Shanghai warehouses remain elevated, adding to pressure. Yet, copper wire prices in China have seen localized strength, with refined wire up 3% to $11,204/mt, showing demand pockets in high-tech manufacturing and grid projects.

Comex vs LME: The Premium Erodes After Tariff Drama

Comex copper, which earlier this year carried a $3,079/mt premium over LME prices as traders priced in Section 232 tariff risks, has lost that advantage since refined copper was excluded from duties in July. By August, parity returned, with the Comex-LME spread averaging $130/mt instead of the multi-thousand gap seen mid-year. This whiplash forced investment funds to liquidate aggressively, with major banks including Goldman Sachs forced to reverse copper bullish calls. Even so, copper products remain under 50% duties, and recommendations from the U.S. Secretary of Commerce suggest a phased tariff of 15% in 2027 and 30% in 2028, which could re-inflate U.S. copper prices relative to international markets.

USGS Pushes Copper Toward “Critical Mineral” Designation

The U.S. Geological Survey’s draft recommendation to add copper to the critical minerals list is a structural development. Copper’s role in electrification, renewable grids, defense, and EV infrastructure makes it central to U.S. strategy. Modeling of over 1,200 trade disruption scenarios by the USGS showed copper as highly exposed to supply shocks. If finalized, this classification could unlock tax incentives, new funding streams, and permitting acceleration for domestic projects, reshaping long-term supply. It would also elevate copper alongside lithium and rare earths in federal strategy, signaling that U.S. policy intends to secure long-term copper availability.

Exploration Growth: Cygnus Expands Chibougamau Project

Cygnus Metals (TSXV:CYG, ASX:CY5) delivered a 78% increase in Measured & Indicated resources at its Chibougamau Copper-Gold Project in Quebec. The update confirmed 193 kt CuEq in M&I and 295 kt CuEq inferred, supported by recent drilling and a newly identified Golden Eye deposit. Grades average 2.3% Cu with 0.8 g/t Au and 7.6 g/t Ag in M&I categories. With $23M in cash and infrastructure including a 900,000 tpa processing facility and rail/highway access, Cygnus is positioned as a near-term North American copper developer. With copper at $9,963/mt, these higher-grade deposits could see economics materially improved in the upcoming updated scoping study scheduled for Q1 2026.

Mergers and Consolidation: Anglo American and Teck Create Copper Powerhouse

The proposed $53 billion merger between Anglo American and Teck Resources would create “Anglo Teck,” a global copper leader producing over 1.2 million tonnes annually, with expansion potential toward 1.35 million tonnes by the early 2030s. Chile remains the centerpiece, with Teck’s Quebrada Blanca and Anglo’s Collahuasi positioned to deliver nearly 1 million tonnes per year in Chile alone. The scale positions Anglo Teck alongside BHP and Rio Tinto as one of the top global copper producers at a time when electrification demand is tightening supply. Shareholders anticipate at least $5 billion in synergies, with shared infrastructure in Chile lowering costs and improving resilience.

Short-Term Technicals: Key Levels for HG=F

Copper futures (HG=F) remain locked within a bullish channel as long as $9,910/mt holds. Today’s trading band is expected between $4.50 and $4.75 per pound, equivalent to $9,920–$10,450/mt. Immediate resistance sits at $10,200, with a breakout targeting $10,500 and potentially $10,950. On the downside, strong support at $9,500/mt aligns with the July consolidation base, while deeper losses could test $9,260/mt.

Investment View: Copper Positioned as a Buy Despite Near-Term Volatility

With copper trading at $9,963/mt, volatility tied to Fed policy and Chinese output masks the stronger structural story. U.S. policy reclassification as a critical mineral, expanding exploration success in Quebec, and Anglo-Teck consolidation all point toward tightening supply against surging electrification demand. Near-term choppiness may persist around Fed events and tariff noise, but structurally copper looks like a Buy, with medium-term targets in the $10,500–$10,950/mt range and longer-term projections potentially breaching $12,000/mt by 2027 as supply bottlenecks intensify.

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