(Bloomberg) -- Copper futures rose to the highest since August, gaining on expectations of quick US interest-rate cuts and a tighter market balance for next year.
Base metals have gained this month on optimism the Federal Reserve will start easing monetary policy and soften a major headwind for commodity prices. Stocks in Asia gained Wednesday after the S&P 500 neared a record high.
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Swap contracts tied to Fed meetings imply a probability of about 85% the US central bank lowers its benchmark rate in March. Traders are pricing in reductions of nearly 160 basis points through 2024 — more than twice as much as Fed officials signaled earlier this month.
Meanwhile, forecasts for chunky growth in copper supply next year were tempered by the Panama government's decree to close a major mine and Anglo American Plc's plan to slash production next year.
“The market's supply-demand balance for next year has changed,” said Ming Gong, a metals analyst at Chinese brokerage Jinrui Futures. “We see disruptions in availability of copper concentrates, and there's still not enough scrap for smelters or consumers.”
LME three-month copper futures rose 1.3% Wednesday to $8,686 a ton by 4:10 p.m. in London, up 3.8% for the year and the highest since Aug. 1. The rest of the base metals complex is all in the green, with aluminum reaching $2,388 per ton — the highest in intraday trading since April 24.
That comes despite LME stocks of aluminum continuing to rise in the wake of UK sanctions on Russian metal. Data released by the exchange Wednesday showed a 15,075-ton inflow into warehouses in South Korea and Taiwan.
Meanwhile, the nickel market is still digesting news that an Indonesian processing facility linked to Chinese metals giant Tsingshan Holding Group has shut after an explosion killed several workers. Employees staged a protest Wednesday to demand better conditions.
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