Understanding the Market | Copper Stocks Rise Collectively as Copper Supply and Demand Relationship Tightens, Overseas Rate Cut Expectations Still Dominate Copper Prices
Copper stocks rose collectively, influenced by the landslide accident at the Grasberg copper mine in Indonesia, which limited supply and led to tightness in the global copper market. China Nonferrous Mining rose 4.89%, MMG rose 3.54%, Jiangxi Copper rose 3.2%, and Zijin Mining rose 2.68%. Citigroup adjusted its global copper mine supply forecast, expecting a slight increase in production in 2025 and 2026. The expectation of a Federal Reserve interest rate cut dominates copper prices; without recession risks, copper prices are unlikely to fall significantly
According to the Zhitong Finance APP, copper stocks have collectively risen. As of the time of publication, China Nonferrous Mining (01258) rose by 4.89% to HKD 14.15; MMG (01208) rose by 3.54% to HKD 6.72; Jiangxi Copper (00358) rose by 3.2% to HKD 32.92; Zijin Mining (02899) rose by 2.68% to HKD 35.2.
On the news front, recently, a landslide occurred at the Grasberg copper mine in Indonesia. The American mining giant Freeport-McMoRan Copper & Gold Inc., which operates the mine, announced that it would be exempt from its supply obligations under the "force majeure" clause in the contract. As the second-largest copper mine in the world by output, the supply constraints at Grasberg have a significant impact on the global copper market. Following the incident, Citigroup adjusted its forecast for global copper mine supply, predicting that global copper mine production will reach 23.15 million tons in 2025, a year-on-year increase of 0.1%; and will reach 23.46 million tons in 2026, a year-on-year increase of 1.3%. These figures have been revised down from previous forecasts.
On the macro front, recently, copper prices rebounded after Federal Reserve Chairman Jerome Powell hinted at a possible rate cut this month. COFCO Futures released a report indicating that the expectation of overseas rate cuts remains the dominant factor affecting copper prices. Current labor market data continues to be the main factor influencing expectations for U.S. rate cuts, but due to the government shutdown in the U.S. causing delays in data releases, attention should be paid to potential fluctuations in expectations after the data is published. For copper prices, it is more important to consider the essence of rate cuts; as long as there is no risk of recession, it is difficult for copper prices to experience significant declines
