Copper prices are on track for their strongest monthly gain in a year, driven by significant supply disruptions even as economic data from China points to ongoing weakness in manufacturing. On Tuesday, copper futures eased on the London Metal Exchange, falling 0.6% to $10,347 a ton by 12:53 p.m. local time. Despite the dip, the metal remains up 4.5% for September, placing it close to a 16-month high. Prices are also up 18% so far in 2024, with levels briefly topping $11,000 a ton in May. Other base metals, including aluminum, zinc and nickel, showed little movement on the day.
The sharp rise in copper prices has been supported by growing supply concerns. Freeport-McMoRan Inc. recently declared force majeure at its massive Grasberg mine in Indonesia after about 800,000 tons of mud inundated underground tunnels. The incident killed at least two workers and forced the company to lower production guidance for both this year and next.
Societe Generale analysts noted that the outage could prolong copper’s rally, calling the commodity “on fire.” They added that if the Grasberg halt persists alongside steady consumption, the global copper market could be heading toward its largest annual deficit since 2004. As part of its longer-term operations, Freeport has also reached a deal to divest a 12% stake in its Indonesian unit to the government at no cost. According to CNBC Indonesia, the divestment forms part of an agreement that extends Freeport’s license to operate Grasberg through 2041.
Demand Trends and Trade Policy Impacts
The surge in prices comes after a turbulent year marked by both supply outages and policy developments. The Trump administration’s trade measures—including country-specific levies and targeted tariffs on certain U.S. copper-product imports—have added uncertainty to the market.
At the same time, expectations of stronger demand remain. Analysts point to two structural drivers: the ongoing global energy transition, which relies heavily on copper for renewable power and electrification, and the rapid expansion of artificial-intelligence data centers, which require significant amounts of the metal for power infrastructure.
Weak Economic Signals From China
Balancing the supply-side disruptions are signals of softening demand from the world’s largest consumer of copper. New economic data released Tuesday showed China’s factory activity contracted for a sixth consecutive month, the longest downturn since 2019.
The official manufacturing purchasing managers’ index registered at 49.8 in September, below the 50-point threshold that separates growth from contraction. The reading offered the first indication that industrial weakness extended through the end of the third quarter.
With prices near multi-year highs, the copper market remains caught between short-term volatility and long-term structural pressures. Analysts stress that the pace of recovery in China’s manufacturing sector will play a critical role in determining whether demand can offset the widening gap in global supply. For now, supply snarls such as the Grasberg disruption appear to be dominating investor sentiment. Whether this trend continues may depend on how quickly output can be restored and how effectively policymakers in Beijing address the slowdown in industrial activity.
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