FX.co ★ Copper Extends Gains on Supply Concerns

Copper futures have surged to almost a two-month peak, exceeding $4.82 per pound as of Thursday. This upward trend extends the gains from the previous day, driven by Freeport-McMoRan's declaration of force majeure on production at its Grasberg mine in Indonesia, the second-largest copper mine globally. This announcement followed a tragic incident on September 8, where a catastrophic mudflow, estimated at 800,000 metric tons, resulted in the death of two workers and left five others missing. As a consequence, Freeport has revised its quarterly sales guidance, reducing copper and gold projections by 4% and 6%, respectively. This event highlights the market's susceptibility to supply disruptions, which is further exacerbated by Hudbay Minerals’ halt in operations at its Constancia mine in Peru due to ongoing protests. Grasberg accounts for 3.2% of the world's copper mining output, nearly 30% of Freeport’s copper production, and 70% of its gold yield, illustrating the significant impact of these developments. Prolonged production interruptions could potentially push prices higher, exerting additional pressure on smelting operations.