Copper Prices Remain Intact Despite Short-Term Pullback

The copper market has pulled back due to technical corrections and profit-taking after a rally. However, fundamental drivers remain in place for long-term price gains.

A recovery in macroeconomic expectations led to a decline in the probability of a US Federal Reserve rate hike, causing dollar-denominated commodities to enter a valuation recovery window. China's Politburo meeting also signaled positive policy shifts, including increased investment in infrastructure and power grids, supporting copper's end-market demand.

The supply rigidity that supports copper prices remains intact due to the long-term structural issue of insufficient capital expenditure in global copper mining. Major copper-producing nations like Chile and Peru have seen sluggish production growth, exacerbating a shortage of copper concentrate. The treatment charge for imported copper concentrate has plummeted to a historic low of -$175.37 per dry metric tonne.

The divergence between the COMEX and LME markets is driven by expectations of US tariffs on refined copper, causing global deliverable copper resources to shift toward the United States. As of August 18, COMEX copper inventories had climbed to a record high of 738,500 short tons.