Copper prices have witnessed a significant rally, surging over 3% to reach their highest levels in nearly 11 months. This upward trend is primarily driven by signs of tightening supplies, particularly following discussions among Chinese smelters about potential joint production cuts.
In the United States, May copper futures soared 3.3% on Wednesday, hitting an 11-month peak at $4.0690 a pound and breaking through key psychological barriers. Meanwhile, on the London Metals Exchange, three-month benchmark copper futures climbed to a nine-month high of $8,927.0 a metric ton.
The enthusiasm for copper was ignited by reports indicating that China’s leading copper smelters convened to deliberate on possible production reductions. This conversation emerges amid a backdrop of weakening refined copper prices and compounded by supply constraints due to production disruptions in Peru and Chile—two of the globe’s foremost copper producers. The past year’s civil unrest in these countries has significantly impacted their copper exports.
Analysts from ANZ highlighted that the setbacks in mine supply are beginning to affect refined copper production, propelling prices upward. The consideration by China’s major smelters to limit production capacity has sparked concerns regarding the availability of refined copper. Furthermore, a noticeable decrease in treatment charges has led to discussions surrounding output restrictions.
Despite the current bullish trend, uncertainties linger about the durability of this price surge. Notably, the potential weakening economic conditions in China could dampen the country’s demand for refined copper. Rising copper inventories in China over the past year have raised alarms about a slowdown in import demand. Additionally, the prolonged slump in China’s real estate sector, a critical consumer of copper, remains a significant concern for future price movements.
The spike in copper prices has also positively impacted major global mining stocks. Australian giants Rio Tinto Ltd and BHP Group Ltd experienced gains exceeding 2% each. In the U.S., Freeport-McMoran’s stock surged 7.6%, and in the UK, shares of the Swiss commodity trading giant Glencore PLC saw an almost 5% increase. 
