By Felipe Barragán, Expert Research Strategist at Pepperstone
October 10, 2025
“The market’s tone is being set by a supply-shock narrative that keeps getting louder. The catalyst this month was Freeport’s force majeure at Grasberg after the September mudslide—now widely expected to curb output well into 2026–27—on top of earlier setbacks in Chile and the DRC. That string of disruptions has flipped near-term balances and pulled investors back into the “scarcity” trade. In fact, copper is reaching new highs since May 2024, when the price spiked with many investors citing mine outages and heavier speculative participation.
Importantly, this isn’t just a one-mine story anymore. Teck trimmed multi-year guidance at Quebrada Blanca in northern Chile this week, reinforcing the idea that the concentrate side remains the chokepoint. And yesterday the International Copper Study Group shifted its 2026 outlook to a refined deficit as production growth slows, even as demand grinds higher in Asia. Those are the kinds of revisions that keep the forward curve tight and dips shallow.
The second engine today is macro and financial conditions. Even with the dollar stabilizing, markets are leaning into an easier Fed path after September’s cut, with the market discounting two more rate cuts this year. Looser US financial conditions typically support copper via a weaker dollar/cheaper carry, and—crucially—by improving risk appetite for cyclical and energy-transition trades. That backdrop helps explain why copper could rally even as hard US data flow is noisy during the government shutdown.
On the demand side, China’s immediate post-holiday read-through isn’t stellar—Golden Week spending per trip slipped to a three-year low, keeping the consumer picture mixed—but the industrial policy impulses that matter for copper (grid, EVs, renewables) remain intact. In other words, macro sentiment is wobbly while structural demand is sticky, which tends to cap the downside as long as supply is constrained.”