Axe_Olga/iStock via Getty Images
Copper futures fell further from an 11-month peak on Wednesday, pressured by worries about demand in top metals consumer China and a stronger dollar ahead of today's U.S. Federal Reserve policy meeting.
According to Reuters, benchmark three-month copper (HG1:COM) on the London Metal Exchange recently traded -0.8% at $8,902/metric ton, after prices spiked to as high as $9,025.50 on Monday, the highest since last April, following a surprise agreement last week by China's copper smelters to cut production.
ETFs: (COPX), (CPER), (OTC:JJCTF)
Analysts at UBS say the YTD copper rally is "just the beginning," as they continue to believe copper is structurally undersupplied and forecast a buildup of tightness in the copper concentrate market.
"The prospect of greater Chinese smelter maintenance in 2Q24 - up to 3M metric tons of capacity - has triggered a surge in the metal's price as processed production not bound to longer-term contracts tightens copper supplies," UBS writes.
"Potential cuts at Chinese smelters strengthen the case for the start of tightening in the global market, reinforcing our view of a 73K mt deficit this year and elevating risks of an even larger shortfall in 2025," the bank says.
Separately, Freeport McMoRan (NYSE:FCX) CEO Richard Adkerson said this week the U.S. must improve its mine permitting process if it hopes to boost domestic supplies of critical minerals to power the clean energy transition.
"The U.S. government needs to stop giving lip service to permitting," Adkerson told Reuters at the CERAWeek energy conference, but "given our political system that we have today and the dysfunctionality of it, how do you go from getting a project verbally accepted to getting actions done?"