Breaking news! Mine shutdowns send LME copper prices soaring 2%, aiming for a 2.5-year high.
2025-09-24 21:55:03
During the European and American trading hours on Wednesday, LME copper prices fell 0.6% during the Asian and European trading hours, influenced by Federal Reserve Chairman Powell's hawkish speech and a rising US dollar index. However, around 8:00 PM Beijing time, LME copper prices suddenly surged 2%, and the upward momentum is still there, reaching a high of around 10,180. Earlier, mining giant Freeport-McMoRan disclosed that its Grasberg Block Cave mine in Indonesia had suspended operations due to a deadly mudslide. This suspension had a significant impact on production, further complicating global copper supply.
The company announced that the large copper and gold mine remains idle: two workers have died in the accident, and the search and rescue efforts for five missing workers are ongoing. The suspension will cause Freeport's third-quarter consolidated sales to fall short of its July forecast—copper sales will fall by approximately 4% and gold sales by approximately 6%.
The impact of the production suspension on the fourth quarter will be further exacerbated: PT Freeport Indonesia's copper and gold sales are expected to be significantly lower than the previous estimate of 445 million pounds of copper and 345,000 ounces of gold.
Looking ahead, Freeport expects Freeport Indonesia's production in 2026 to fall by approximately 35% from the original forecast (1.7 billion pounds of copper and 1.6 million ounces of gold); based on the phased restart plan, the company expects it will take until 2027 at the earliest to return to pre-accident operating capacity levels.
Freeport said its Big Gossan and Deep MLZ mines are expected to restart in the middle of the fourth quarter, while the phased restart and capacity ramp-up of the Grasberg mine is expected to begin in the first half of 2026.
The company has declared force majeure on the relevant contracts and expects the insurance compensation for this accident to be capped at US$700 million after deducting a US$500 million deductible.
As one of the world's largest copper mines, the mine's production capacity interruption came at a time when global copper supply was already under tight pressure. This factor further pushed up copper prices, with LME rising rapidly by more than 2% during the session.
(LME copper intraday chart)
The company's shares fell 9% in pre-market trading on the news. The sales decline was primarily due to disruptions at its Grasberg mine in Indonesia. Earlier this month, wet material blocked an underground passage, forcing operations to halt and killing two workers.
Freeport-McMoRan's latest financial report warning shows that it expects its combined sales of copper and gold in the third quarter to fall by about 4% and nearly 6%, respectively, compared with previous expectations.
In addition, a smelter built by the company in Indonesia was closed last year due to fire damage, which also had a certain impact on its business.
The company had previously forecast third-quarter combined sales of 1 billion pounds of copper and 350,000 ounces of gold.
Reduced supplies of copper and gold will boost copper and gold prices.
This year, the market consensus has been that the global technology narrative will lead to a surge in copper demand. Coupled with the short-term rigidity of global copper production, this will lead to a copper supply shortage. This accident has exacerbated the upstream copper supply woes, and this unexpected development could trigger a rapid rise in LME copper prices.
LME copper tested the lower track of the rising trend line during the Asia-Europe period and then stretched in a straight line. It is likely to launch an attack on the upper edge of the rising channel. As this incident has brought unexpected development to the supply of copper, the copper price is expected to touch the upper track of the rising trend line. If successful, it may break through the two and a half years high of around 10150 that has been maintained for one year, and then it is expected to challenge the historical high of 11100.
(LME copper daily chart, source: Yihuitong)
At 21:46 Beijing time, LME copper is currently trading at US$10,161 per ton.
The company announced that the large copper and gold mine remains idle: two workers have died in the accident, and the search and rescue efforts for five missing workers are ongoing. The suspension will cause Freeport's third-quarter consolidated sales to fall short of its July forecast—copper sales will fall by approximately 4% and gold sales by approximately 6%.
The impact of the production suspension on the fourth quarter will be further exacerbated: PT Freeport Indonesia's copper and gold sales are expected to be significantly lower than the previous estimate of 445 million pounds of copper and 345,000 ounces of gold.
Looking ahead, Freeport expects Freeport Indonesia's production in 2026 to fall by approximately 35% from the original forecast (1.7 billion pounds of copper and 1.6 million ounces of gold); based on the phased restart plan, the company expects it will take until 2027 at the earliest to return to pre-accident operating capacity levels.
Freeport said its Big Gossan and Deep MLZ mines are expected to restart in the middle of the fourth quarter, while the phased restart and capacity ramp-up of the Grasberg mine is expected to begin in the first half of 2026.
The company has declared force majeure on the relevant contracts and expects the insurance compensation for this accident to be capped at US$700 million after deducting a US$500 million deductible.
As one of the world's largest copper mines, the mine's production capacity interruption came at a time when global copper supply was already under tight pressure. This factor further pushed up copper prices, with LME rising rapidly by more than 2% during the session.
(LME copper intraday chart)
The company's shares fell 9% in pre-market trading on the news. The sales decline was primarily due to disruptions at its Grasberg mine in Indonesia. Earlier this month, wet material blocked an underground passage, forcing operations to halt and killing two workers.
Freeport-McMoRan's latest financial report warning shows that it expects its combined sales of copper and gold in the third quarter to fall by about 4% and nearly 6%, respectively, compared with previous expectations.
In addition, a smelter built by the company in Indonesia was closed last year due to fire damage, which also had a certain impact on its business.
The company had previously forecast third-quarter combined sales of 1 billion pounds of copper and 350,000 ounces of gold.
Reduced supplies of copper and gold will boost copper and gold prices.
This year, the market consensus has been that the global technology narrative will lead to a surge in copper demand. Coupled with the short-term rigidity of global copper production, this will lead to a copper supply shortage. This accident has exacerbated the upstream copper supply woes, and this unexpected development could trigger a rapid rise in LME copper prices.
Technical Analysis:
LME copper tested the lower track of the rising trend line during the Asia-Europe period and then stretched in a straight line. It is likely to launch an attack on the upper edge of the rising channel. As this incident has brought unexpected development to the supply of copper, the copper price is expected to touch the upper track of the rising trend line. If successful, it may break through the two and a half years high of around 10150 that has been maintained for one year, and then it is expected to challenge the historical high of 11100.
(LME copper daily chart, source: Yihuitong)
At 21:46 Beijing time, LME copper is currently trading at US$10,161 per ton.
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