Copper Approaches $10,000 A Ton Amidst Supply Concerns

Copper surged towards the USD 10,000 per ton mark, marking a new milestone in its upward trajectory, fuelled by investor optimism amidst lingering supply constraints in the global market. According to a report by Bloomberg, the bellwether industrial metal's rally to a fresh two-year high underscore growing confidence in its long-term prospects, even as geopolitical tensions and monetary policy uncertainties loom large on the horizon.

In recent weeks, base metals, including copper, have witnessed broad-based gains, with copper opening Monday's trading session with a fresh surge to USD 9,988 per ton. The resurgence in manufacturing activity across key economies such as the US and China has bolstered sentiments towards metals, despite prevailing risks stemming from geopolitical tensions and monetary policy fluctuations.

Copper's ascent has been initially propelled by disruptions at major mines, exacerbating supply concerns and prompting smelters to seek alternative sources. While Chinese demand experienced a seasonal lull, optimism persists regarding a potential rebound in global manufacturing activity, which could provide a much-needed boost to copper demand.

Analysts at Citigroup Inc. emphasised the significance of data and individual metal fundamentals in shaping the trajectory of copper prices. They highlighted a bullish outlook for copper in the coming months, driven by expectations of a tighter market and short covering, contrasting with weaker fundamentals observed in other metals.

Meanwhile, in the aluminium market, orders for metal withdrawal from Asian depots have surged for the fifth consecutive day, driving available stock levels to near-record lows. Reports indicate significant withdrawal orders from exchanges by key players such as Glencore and Trafigura, further underscoring the supply squeeze in the aluminium market.

Copper's upward momentum persisted during Monday's trading session, with prices climbing as much as 1.1 per cent to reach USD 9,988 per ton before settling at USD 9,921.50 per ton by mid-morning. However, other metals experienced mixed fortunes, with zinc recording a 0.5 per cent decline and tin witnessing a 2.5 per cent drop, reflecting the nuanced dynamics within the base metals market.