Copper Charges Higher As Supply Squeeze Meets Rate-Cut Hopes

Copper traders opened December watching prices grind near record levels. Benchmark futures in New York hover around $5.31 per pound, while London’s three-month contract trades close to $11,200 per tonne after a week of brisk gains.

Over the past seven days, copper has climbed from $5.03 to above $5.30, with the strongest sessions on 26 and 28 November as investors bought after profit-taking.

Friday’s rally carried into thin overnight trade, marking November as part of a bull run driven by tight supply and electrification. The physical story is doing most of the work.

Major mines in Indonesia have cut guidance, and leading banks now project sizeable market deficits in 2025 and 2026. Chinese smelters have signalled coordinated output cuts, while Chile’s Codelco can charge record premiums for 2025 shipments.

Spot inventories in Chinese hubs have fallen, even as end-users grumble that prices are too high to justify new orders. That tension runs through the market. Fabricators report the weakest operating rates since February.

Yet trading houses say aggressive buying for the United States, where manufacturers pay rich premia and resist heavy-handed state intervention, is pulling cathodes away from other regions and pushing futures higher.

Financial flows are reinforcing the squeeze. Copper-tracking funds sit near highs and still attract inflows, while open interest on futures has crept higher rather than collapsing in a speculative blow-off.

Expectations that the US Federal Reserve could cut rates sooner, and a softer dollar, add fuel to the move. Charts tell a similar story.

On four-hour time frames, copper rides the top of its Bollinger band with overbought momentum, hinting at the risk of short-term pullbacks.

Daily and weekly indicators still point to an orderly uptrend, with support now layered around $5.20 and resistance emerging near recent highs.

For now, copper’s message to governments and investors is blunt. Years of under-investment and policy uncertainty have tightened supply just as the global economy asks the red metal to electrify transport, grids and data centres.

Easing that squeeze will require stable rules and large, long-term private investment that politicians cannot easily raid when prices turn.