In September 2024, copper futures surged to over $4.3 per pound, marking the highest price level in two months. This upward momentum is largely attributed to a softening US dollar, which has made copper more attractive to investors. Additionally, there are growing expectations for stronger demand alongside supply uncertainties, particularly from key markets.

The Federal Reserve made a significant move by announcing a 50 basis point (bps) rate cut during its monthly meeting. This decision aligns with the upper range of divided market expectations and is viewed as a response to the sluggish factory momentum in the US. Recent data has shown contraction in manufacturing, highlighted by the latest ISM and S&P manufacturing PMIs, which indicate that economic conditions are challenging.

Furthermore, market participants are closely monitoring developments in China, the world’s largest copper consumer. Recent reports of weaker-than-expected industrial output, retail sales, and fixed-asset investments have raised concerns about the country’s manufacturing sector. Analysts suggest that without additional stimulus, China's economic recovery could continue on a downward trajectory, further impacting global copper demand.

On the supply side, there are pressing concerns stemming from Zambia, one of the primary suppliers of copper ore. Ongoing energy shortages in the region have constrained production capabilities, exacerbating the existing uncertainties in copper supply chains. These supply challenges, combined with demand fluctuations, create a complex landscape for copper futures.

In summary, the increase in copper futures is a multifaceted development influenced by currency dynamics, shifts in monetary policy, and both domestic and international demand signals. As markets await further economic support measures, especially from China, the situation remains fluid, and stakeholders will need to navigate these challenges carefully.

For more detailed analysis and updates on copper and other commodities, please stay tuned to our regular reports.

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