Key Points

Copper prices dipped 0.32 per cent after a surge of over 5 per cent following a mudflow at Freeport-McMoRan's Grasberg mine in Indonesia, the second-largest copper mine in the world.

MCX copper futures for September expiry reached Rs 950, while London Metal Exchange futures rose to approximately $10,300 per metric tonne on THursday. Traders attributed this surge to a 3-4 per cent loss in anticipated global mined copper output from Grasberg, equating to over 2,50,000 tonnes removed from 2025 production.

Analysts said that the copper prices have soared almost 20 per cent this year on tightening supply and relentless demand from the global energy transition.

"The rally has been fuelled by electrification, EV adoption, grid upgrades, renewable installations, and a surge in AI-driven data centres, all of which are highly copper-intensive," said Navneet Damani, Head of Commodity Research at Motilal Oswal Financial Services Ltd. (MOFSL).

On the supply front, conditions have tightened significantly. Apart from the Grasberg incident, refining bottlenecks and a scarcity of concentrate have further slowed the translation of mine projects into refined copper output, Damani added.

These pressures have driven inventories to multi-year lows, below the 5-year average. For the first 7 months of the year, the market had 1,01,000 tonnes of surplus stock compared with a 4,01,000 tonnes surplus in the same period a year earlier.

Freeport‑McMoRan declared force majeure on copper shipments from its Grasberg mine and halted blockcave operations indefinitely.

China had also reduced refined copper production by 5 per cent in early September, impacting the market by approximately 500,000 tonnes.

Copper miners are likely to benefit from higher prices, with their profits expected to remain on the higher side for the foreseeable future, MOFSL said in a note.

- IANS