Copper prices retreated after hitting their highest level in over a year, pressured by a stronger US dollar as markets weighed the fallout from supply disruptions at Freeport-McMoRan Inc’s Grasberg mine in Indonesia.
The dollar index climbed to its strongest since Sept 5, boosted by upbeat US jobless claims and second-quarter growth data, making commodities like copper more expensive for non-dollar buyers.
Freeport-McMoRan Inc’s Grasberg mine in Indonesia. Two workers were killed while another five were missing in an underground tunnel accident at the Grasberg mine.
On the London Metal Exchange (LME), copper futures slipped as much as 0.8% after earlier rising 1.4%. The pullback followed Wednesday’s surge, when Freeport trimmed its copper and gold sales outlook after five workers went missing in a tunnel accident at its Grasberg site, where two fatalities were confirmed.
“This adds more uncertainty to the supply picture, from current production to future projects,” said Craig Lang, principal analyst at CRU International Ltd. “It’s hard to quantify the exact impact, but it will likely keep upward pressure on prices.”
Copper remains about 7.5% below its May 2024 record high. Market stress is showing in LME spreads, with December contracts trading up to US$69 (RM290) a tonne higher than those maturing a year later — a backwardation that signals strong demand outpacing supply.
The Grasberg disruption is the latest in a series of setbacks, with Hudbay Minerals suspending operations in Peru amid protests, and earlier output issues at mines owned by Ivanhoe Mines Ltd and Codelco.
UBS analysts reiterated a bullish outlook, noting Grasberg’s force majeure will deepen expected deficits next year. Macquarie estimates a hit of around 210,000 tonnes in the second half of 2025, while Goldman Sachs now sees global copper supply rising just 0.2% this year.
“US$10,000 was once seen as a ceiling for copper, but with mounting supply risks, it’s starting to look more like a floor,” said Nour Al Ali, strategist at Bloomberg. “Europe and Asia are particularly exposed, given large volumes of copper were diverted to the US earlier this year on tariff concerns.”
As of 10.27am London time, copper was down 0.6% at US$10,275 a tonne, still up about 17% year-to-date. Other base metals traded mixed, with nickel edging 0.2% higher and zinc slipping 0.3%.
