Copper prices have pulled back from their all-time high, with a steadier US dollar dampening some of the momentum that had driven the metal higher. However, low inventories, tight physical supply, and a lack of new mine development continue to underpin prices, keeping the market optimistic about the medium-to-long-term outlook.
On Tuesday, most base metals declined on the London Metal Exchange (LME). LME copper dipped to $14,149 per tonne, just one day after setting a record closing high, before settling at $14,273 per tonne. At the time of writing, copper had trimmed its losses to 0.1%, trading at $14,257.9 per tonne. Other metals like aluminium and nickel also fell, dropping 0.4% and 0.5%, respectively.
In the near term, market focus is shifting to Federal Reserve Chair Warsh's speech at the Jackson Hole central bank symposium on Friday. Investors will be scouring his remarks for clues on how the Fed plans to tackle inflation and whether further monetary policy adjustments are on the horizon.
Steadier Dollar, but Supply Side Remains in Focus
Last week, US bond market intervention measures had pressured the dollar and boosted metal prices. But with the dollar stabilizing this week, that support has faded. Bessent also offered no further details on debt management reform plans on Monday, cooling the trading fervor that had built around bond market intervention.
Supply remains a key pillar of support for copper. LME copper inventories are hovering at relatively low levels, and concerns persist that insufficient new mine development could widen future supply gaps. Over the past week, inventory issues have drawn increased attention, with spot copper at times trading at a notable premium to futures, signaling intense competition for near-term physical supply.
Although the spread between spot and futures prices has since narrowed, the large-scale delivery requests seen on Monday have still caught the market's eye. Citi reiterated its forecast in its latest report that copper will rise to $15,000 per tonne by year-end, advising investors to buy on dips once market positioning retreats from elevated levels.
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