Written Commentary
Base Metals
Copper: Benchmark three-month copper on the London Metal Exchange fell 0.2% to 10,320 a ton after rising 0.9% to $10,431.50 earlier in the session. Proposed controls on smelting capacity in China compounded supply fears after Freeport-McMoran slashed its production forecasts for its mine in Indonesia. The China Nonferrous Metals Industry Association said it had proposed specific measures to control copper smelter expansion as persistently low processing fees have reduced smelter profits. China’s political leaders said in early July they would tackle “disorderly price competition.” Representatives from several copper smelters in the country attended the industry meeting the easing in prices signals that short-covering from traders is mostly done.
LME copper hit a 15-month high on Wednesday after Freeport-McMoran Inc. declared force majeure at its Grasberg mining complex in Indonesia after a deadly landslide earlier in September forced the miner to suspend operations. Grasberg is the world’s second largest copper mine, with the halt in operations playing a significant role in global supply. Copper markets had initially priced in some supply tightness however, Freeport slashed its production guidance saying 2026 production out of Indonesia could fall 35% from previous estimates. Following the statement, a surge of short-covering saw benchmark three-month copper on the LME rise 3.9%. The rally also lead other base metals higher. The discount for the LME’s cash copper contract against the three-month forward has drastically narrowed to $10 a ton on earlier on Thursday, from $73 a ton on Tuesday, indicating tighter immediate availability. Goldman Sachs on Thursday lowered its global copper mine supply forecast for 2025 and 2026, estimating a total loss of 525,000 tons of copper mine supply due to the disruption.
Zinc: Zinc added 0.5% to $2,953. LME zinc stocks are at 44,400 tons, the lowest since April 2023.
Aluminum: Aluminum is up 0.5% to $2,665 a ton. Yesterday in the US, the premium to buy aluminum on the physical market over the LME price rose to a record high of $0.74 per lb/$1,631 a ton. The premium has doubled since President Trump raised the tariffs on imports from 25% to 50%. It is likely the market has used up much of the 150,000 ton inventory build ahead of the tariffs, resulting in the price impact the market is seeing now.
Tin: Tin gained 0.7% to $34,550.
Lead: Lead inched up 0.1% to $2,002.
Nickel: Nickel is up 0.3% at $15,470.
Precious Metals
Gold: Gold futures are higher, recovering some losses from earlier in the morning after a release of strong economic data out of the US dampened expectations of interest rate cuts from the Fed and sent the dollar higher. US GDP was revised higher to reflect a 3.8% growth in Q2, while durable goods orders unexpectedly rose and initial jobless claims fell to a two-month low. The data release resulted in traders scaling back bets of Fed rate cuts in October and December. Markets now pricing an 81% chance of a rate cut in October, down from 92% at this time yesterday, while odds of a December rate cut fell from 73% to 59% according to Federal Funds futures.
On the geopolitical front, NATO warned Russia on Tuesday that it would use “all necessary military and non-military tools” to defend itself, as President Trump shifted rhetoric by asserting that Ukraine could recover all territory occupied by Russia with support from the EU and NATO.
Still, persistent central bank and ETF demand continues to support gold prices, with SPDR Gold Trust holdings reaching a three-year high and China extending its buying streak to ten months. Despite elevated bullion prices and rising input costs, resilient official sector purchases, especially from China and Poland, are helping establish a price floor, with potential upside if US interest rates ease, bolstering gold’s appeal as a reserve asset and inflation hedge.
Silver: December silver contracts rose over 1.4% despite headwinds from a stronger dollar and positive US economic data. Silver continues to see sustained support from strong fundamentals, with tight supply underpinning prices and a solid demand picture from solar, electric vehicle, and other tech industries.
Platinum: Platinum rose higher with December contracts up 1.7%, erasing losses from yesterday. Platinum is gaining support amid a persistent supply gap caused by weak mine output and stagnant recycling. The World Platinum Investment Council aexpects South Africa’s mine supply to fall 6% this year. Although recycled platinum supply is improving modestly, it remains at historically low levels.
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