Copper surges to 14 month high amidst, supply concerns and optimistic demand outlook

Copper surged to its highest level in 14 months as investors turned to the key industrial metal amidst growing concerns over supply disruptions and optimism regarding a global economic recovery.

Prices rose by as much as 1.5% on Thursday, fueled by dovish remarks from Federal Reserve Chair Jerome Powell. These comments provided additional momentum to a rally that commenced in early February due to mounting risks to supply.

Disruptions at major mines have resulted in smelters paying historically high prices to secure mined ore. Furthermore, Chinese plants, which account for over half of the world's refined copper production, are considering implementing a joint output cut in response to the situation.

Simultaneously, early indications of a rebound in the global manufacturing sector are fueling hopes that tightening market conditions could propel copper prices to new highs.

Certainly, concerns persist regarding demand in China's property sector and other key industries, with a seasonal slowdown in activity lingering longer than optimistic investors would prefer. However, outside of China, there is increasing optimism that India's substantial infrastructure spending initiatives and the global surge in artificial intelligence investments will create significant new areas of demand growth.

On the supply side, doubts persist regarding whether Chinese smelters will implement meaningful output cuts. Nevertheless, production risks continue to mount at mines worldwide. For instance, Ivanhoe Mines reported a 6.5% quarterly decline in output at the vast Kamoa-Kakula mining complex in the Democratic Republic of Congo on Wednesday. Additionally, drought conditions in neighboring Zambia are jeopardizing the country's major planned expansion of mined output.

Copper climbed 1.1% to $9,361 a ton on the LME as of 5:21 p.m. in London, while aluminum advanced 0.8% and zinc gained 3.4%. Chinese markets remain closed for holidays.

The release of US nonfarm payrolls data on Friday could provide clarity on when the Fed might consider pivoting to cut interest rates.