Copper prices drop on Fed policy uncertainty and Codelco supply boost

Copper prices fall 2.4% as Fed policy uncertainty and improved Codelco output ease supply fears. Analysts say demand remains muted despite 2025’s 20% rally.

Copper prices extended their losses on Tuesday, pressured by renewed uncertainty over US interest rates and easing supply concerns following positive production signals from Chilean state miner Codelco.

Three-month copper on the London Metal Exchange (LME) fell as much as 2.4%, trading around $10,855 per tonne by 1 p.m. ET. On the COMEX, prices hovered near $5.013 per pound (about $11,050/t), as part of a broader decline in base metals.

Market focus shifts to Fed and China

After weeks dominated by headlines on US–China trade relations, investor attention has pivoted to the Federal Reserve’s next policy move and the outlook for China’s slowing economy.

Recent statements from Fed officials have deepened market uncertainty. While Chair Jerome Powell cautioned that a December rate cut isn’t guaranteed, Chicago Fed President Austan Goolsbee said inflation remains a bigger concern than employment, tempering expectations for near-term monetary easing.

The shifting stance has driven the US dollar to its highest level since May, further weighing on metals that had surged last week in anticipation of a Washington–Beijing trade truce.

Codelco output relieves supply concerns

Copper’s decline also follows signs of supply stabilization after months of market jitters. Earlier this week, Codelco—the world’s largest copper producer—said it expects output to rise this year and next, providing relief to traders after a string of disruptions, including a collapse at its El Teniente mine earlier in 2025.

“While the supply disruptions admittedly are significant, in our view they are still not sizable enough to push the copper market into deficit,” said Carsten Menke, head of next-generation research at Julius Baer Group, in a note cited by Bloomberg.

He added that global demand remains moderate: “We do not expect it to strengthen materially, even with the easing of trade tensions between the US and China.”

A volatile year for the red metal

Despite the recent pullback, copper prices remain up more than 20% in 2025, supported by mine disruptions and expectations of long-term demand growth tied to electrification and renewable energy technologies.

Analysts caution, however, that macroeconomic uncertainty and China’s sluggish recovery could limit further gains in the near term.