- Political tensions fuel hopes of US rate cuts
- Codelco output cuts deepen supply concerns
Copper prices on the London Metal Exchange (LME) moved slightly higher last week but were under pressure mainly due to the strengthening of the US dollar, which makes copper more expensive for buyers using other currencies and tends to reduce global demand. The benchmark 3-month copper contract closed at $9,877/t on 29 August 2025, up $151/t from $9,726/t on 22 August.
Compared with the small decline seen earlier, LME inventories recorded strong growth, rising from 155,975 t on 22 August to 158,900 t on 29 August, mainly due to tariff-driven re-routing of shipments, restocking after earlier drawdowns, and shrinking global warehouse capacity. While the build reflects short-term logistical shifts, levels still remain above early-summer averages, indicating steady demand amid otherwise tight market fundamentals.
Copper prices gained momentum, lifted by positive economic signals from both the US and China. Robust US growth — driven by business investment and consumer spending — combined with signs of stabilization in China’s manufacturing sector, strengthened demand expectations and pushed LME copper close to a one-month high of $9,898/t.
Political tensions in the US further fuelled optimism for interest rate cuts, weighing on the dollar and making metals more attractive for global buyers. A burst of buying interest offset earlier selling pressure from China, while supply risks deepened as Chile’s Codelco lowered its annual production forecast following operational setbacks. Market participants noted that technical support levels and supply disruptions continue to underpin prices, even as attention shifts to upcoming Chinese manufacturing data for clearer demand cues.
The rally was reinforced by resilient US growth and Beijing’s efforts to stabilize industrial activity, which helped ease concerns about softer fundamentals. While a weaker dollar could provide additional upside, traders remain cautious about the impact of looser physical markets and persistent headwinds from China’s economy.
Outlook
Copper prices are likely to remain supported in the near term underpinned by resilient US growth, expectations of Chinese manufacturing stabilization, and ongoing supply risks from Chile, though a firm US dollar and elevated inventories could cap gains. Traders will closely watch upcoming Chinese economic data and US monetary policy signals for the next direction in prices.
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