- The benchmark copper on the London Metal Exchange (LME) reached a three-month high of $13,558.50 per ton, driven by expectations that the capacity recovery at Freeport-McMoRan's (FCX:US) Grasberg copper mine in Indonesia will be delayed until early 2028.
- Copper inventories on the Shanghai Futures Exchange (SHFE) fell by 5.6% to 181,333 tons, hitting a new low since January. The tightening expectations on the spot side, combined with potential U.S. tariff policies, have given Comex copper futures a relative performance advantage.
- The internal trends of base metals show structural divergence, with expectations of easing Gulf region conflicts boosting LME aluminum prices by 0.9%, while lead, zinc, and tin recorded moderate pullbacks of 0.6% to 0.7%.
Supply Disruptions Reshape Term Structure
The supply-side constraints in the global copper market are tightening further. The unexpected extension of the full production cycle at the Grasberg mine in Indonesia, a key global source of copper concentrate, has directly altered the market's logic for mid-term balance sheet calculations. Freeport-McMoRan's (FCX:US) previous guidance for near full-capacity production by the end of 2027 has been postponed. This delay in physical capacity release led to a 1.3% increase in LME copper prices on Friday. The cumulative weekly gain for LME copper is expected to reach 4.4%, potentially marking the largest weekly increase since the fourth quarter of 2025 if the trend continues. This expectation reassessment triggered by mine disruptions is causing the forward curve to exhibit a stronger spot premium tendency.
Divergence in U.S.-China Inventory Cycles and Regional Premiums
At the inventory cycle level, the data from the world's two major consumption and trading centers show significant divergence. SHFE copper inventories accelerated their decline, down 5.6% from last week to 181,333 tons, indicating a marginal improvement in downstream pickup willingness in the Asian market after a period of price consolidation. Meanwhile, U.S. Comex copper futures continue to outperform the global benchmark, with a weekly gain expected to reach 6.3%, pushing prices up to $6.25 per pound. This regional excess return partially reflects the market's forward-looking defensive pricing against potential U.S. tariffs on copper imports, leading to a solidification of the spot premium structure in North America.
Marginal Recovery of Macro Sentiment and Geopolitical Pricing
Base metal prices are influenced not only by micro supply and demand but also by macro geopolitical sentiment. With potential easing expectations in the Gulf region conflicts, market funds are gradually returning from extreme tail risk hedging modes to traditional economic cycle trading themes. According to Panmure Liberum, if geopolitical tensions substantially cool down, investors' asset allocation focus will return to pricing the recovery of global industrial manufacturing. This marginal recovery of macro sentiment provides underlying logical support for copper prices to maintain high-level fluctuations in the medium to long term.
Capital Rotation Characteristics in the Base Metals Sector
Against the backdrop of significantly stronger copper prices, the internal rotation effect among other base metals is becoming more apparent. Influenced by the spillover effect of tight energy supply in the Gulf region, LME aluminum prices rose by 0.9% to $3,523.50 per ton. However, SHFE aluminum inventories rose against the trend by 2% to 492,728 tons, reaching a six-year high, indicating some spot digestion pressure in the domestic aluminum market. Additionally, nickel prices experienced a technical pullback of 0.3% after reaching the 20,000 mark on Wednesday, while the collective decline in lead, zinc, and tin reflects that current bullish funds prefer to concentrate on copper resources with supply constraints rather than indiscriminate allocation within the sector.
