December 4th (Argus) - Due to rumors of planned production cuts by Chinese smelters, a sharp drop in exchange-traded inventories, and rising expectations of a December interest rate cut by the Federal Reserve, copper prices outside the United States have recently reached historical highs. On December 3rd, the price of three-month copper on the London Metal Exchange climbed to $11,540 per tonne, setting a new record; the most active January contract on the Shanghai Futures Exchange also reached $91,240 per tonne, also breaking a historical high. The background of this price increase is that members of the China Copper Raw Materials Joint Negotiation Group may plan to reduce the utilization rate of primary copper smelting capacity by at least 10% in 2026 to cope with the situation where copper concentrate processing and refining costs are far below reasonable levels. The market expects that these smelters will increase the use of copper scrap to partially replace concentrate raw materials, and this will rely on a higher proportion of scrap copper imports or a more complete domestic recycling system. Some opinions suggest that China's scrap copper imports may increase by 5% in 2026, but some traders expect domestic scrap copper production to remain stable. The registered warehouse stocks on the London Metal Exchange dropped by 56,875 tonnes to 105,275 tonnes on December 3rd, with a single-day decline of 35%, further supporting the strengthening of copper prices. The inventory reduction mainly came from Asian warehouses, where the Port of Busan and Gwangyang warehouses reduced by 6,500 tonnes and 14,625 tonnes respectively, and the inventory in the Kaohsiung warehouse in Taiwan decreased by 31,725 tonnes. Market experts pointed out that these cancelled warehouse stocks may be transferred to the United States, as the copper price difference between the London Metal Exchange and the New York Mercantile Exchange widened to $591.22 per tonne on December 3rd, compared to $182.41 per tonne on November 24th. At the same time, market expectations for the possibility of the United States including refined copper in the tariff scope have increased. The United States waived 50% of the 232 clause tariffs on refined copper on August 1st, but plans to review and decide whether to resume taxation in June 2026 starting from 2027. The major producer in Chile, Codelco, set a new high of $500 per tonne for copper premiums to US customers in 2026, significantly higher than $335-350 per tonne for Chinese customers and $325 per tonne for European customers, reflecting the uncertainty of US trade policies. It is expected that the supply of refined copper in the United States will remain abundant in 2026, while the supply outside the United States may remain tight, which may continue to support the copper prices in London and Shanghai. The rising expectations of a Federal Reserve interest rate cut have pushed the price of metals in the market to a 89.2% probability of a December rate cut, compared to 81.1% on November 25th. This change stems from the continued weakness of US manufacturing activity. The US manufacturing purchasing managers' index dropped to 48.2 in November, below 48.7 in October, marking the ninth consecutive month in the contraction zone. The employment report shows that the number of private sector jobs in the United States decreased by 32,000 in November, compared to an increase of 42,000 in October. Affected by the weak economic data, the US dollar index dropped to 98.854 on December 3rd. The weakening of the US dollar has reduced the purchase cost of commodities priced in US dollars, thereby supporting copper prices.
Argus Daily Market Report on Non-US Metals covers the global non-US metals market and provides a series of daily price assessments, as well as key market dynamics and analyses provided by Argus' professional teams worldwide. Market coverage: Rare metals - Electronics, batteries, light metals and high-temperature metals; Rare earth - Light rare earth and medium-heavy rare earth; Ferroalloys - Bulk and specialty alloys; Mineral raw materials - Trading data, premiums and exclusive price assessments/indices; Non-ferrous scrap and recycled alloys
Long press and scan the QR code to apply for a trial subscription Argus has launched a copper concentrate average index to show the average purchase price of TC/RC by smelters and traders, helping market participants better cope with supply-demand imbalances and fulfill regular contracts. The new index is updated every Friday and generates a monthly average at the end of each month. It is published in the Argus Daily Metals Market Report and the Argus Metals website (metals.argusmedia.com).
