Copper jumped to two-month highs due to the threat of potential supply restrictions and lower rates in Chinese smelters for producers of the mineral, all of this amid optimism due to the expectation that the cycle of lower rates in the United States could soon begin. Joined.
At the close of trading this Monday, the three-month copper future rose 1.75% to US$3.84 per pound on the Comex Mercantile Exchange, reaching its highest price since September 14.
Warnings of a closure at First Quantum Minerals’ Panamanian mine fueled bets on more restricted production of the mineral, to which were added strikes at MMG’s Las Bambas mine in Peru, Bloomberg highlighted.
In addition, investors anticipate a climate of lower interest rates. Traders are pricing in a 30% chance that the Federal Reserve will begin its easing cycle as soon as March 2024, according to data compiled by the CME FedWatch Tool.
Support from China
Also influential was the news that Antofagasta Minerals – the mining arm of the Luksic group – and the Chinese smelter Jinchuan, agreed to an annual treatment fee of US$ 80 per ton for next year, which is 9% lower than 2023 levels.
«It is the first decrease in three years. The relaxation of treatment rates suggests that the copper concentrate market is expected to tighten in 2024,” wrote ING analysts Warren Patterson and Ewa Manthey.
Copper inventories have fallen for two consecutive weeks in Shanghai warehouses, reaching their lowest levels since September 2022, contributing to upward pressure on prices.
«Demand for copper seems strong in China, especially in ecological sectors. We know that utilization rates at wire bar plants picked up in mid-November,” Amalgamated Metal Trading head of research Dan Smith told Reuters.