Copper Surges to Record High as Fed Cuts Rates and Lifts Growth Outlook

Summary:

Copper prices hit an all-time high of $11,800.50 per ton in London after the US Federal Reserve cut interest rates and upgraded its economic growth forecast, signaling stronger demand prospects and improved sentiment in industrial metals....

Fed Rate Cut Spurs Metal Rally

The Federal Reserve's decision to lower interest rates for the third consecutive meeting acted as a catalyst for the industrial metals rally. With rates reduced and the Fed’s tone hinting at caution toward future cuts, markets interpreted the move as a boost for growth-sensitive commodities. The central bank also raised its US GDP growth forecast for 2026 to 2.3%, up from 1.8%, while expecting inflation to ease to 2.4%. This dual outlook of solid growth and cooling inflation is particularly supportive for industrial demand.

Copper surged as much as 2.1% to reach $11,800.50 per ton, surpassing Monday’s record, and was still trading at $11,765 as of 2:29 p.m. on the London Metal Exchange. The metal has now gained nearly 35% year-to-date, driven not only by monetary easing but also by global supply concerns. Mine disruptions and stockpiling in the US due to expected tariffs in 2026 have amplified fears of an international shortage. At the same time, long-term demand remains underpinned by the ongoing expansion of renewable energy and electrification projects, sectors that rely heavily on copper.

China’s Mixed Influence

While Chinese copper consumption had declined in recent months, optimism has begun to return following Beijing's pledge to maintain a “proactive” fiscal policy and a “moderately loose” monetary approach. These policy signals suggest that domestic demand support is forthcoming, although the pace and scale of such recovery remain uncertain.

The bullish sentiment extended beyond copper. Tin jumped 3.8% to a three-year high of over $41,500 per ton, while zinc rose 3%. The only major metal not participating in the rally was nickel, which remained under pressure. Lower interest rates generally enhance the attractiveness of non-yielding commodities like metals, and they reduce borrowing costs for capital-intensive sectors like construction, infrastructure, and manufacturing.

Copper’s historic breakout reflects a convergence of monetary stimulus, strong US economic projections, and persistent supply bottlenecks. While short-term volatility remains especially with China’s recovery still uncertain the medium-to-long term fundamentals for copper appear robust, particularly amid the ongoing energy transition. Further upward pressure on prices could emerge if Chinese demand rebounds more forcefully or if geopolitical or trade tensions escalate supply risks.

Source: Reuters

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