The Fed's interest rate cut adds fuel to the uptrend, copper prices approach historic highs.

After the Fed announced a rate cut and maintained expectations for another cut next year, copper prices approached historical highs, and prices of other metals also rose. London metal futures rose by 1.5% at one point, then gave back more than half of the gains. The Fed had cut rates for the third consecutive time, but with slightly changed wording, implying greater uncertainty about future rate cuts. Meanwhile, senior Chinese officials stated on Monday that the world's second-largest economy will continue to maintain a "moderately loose" monetary policy and take more proactive fiscal measures. Chinese trade data also supported copper prices. Data showed that last month's exports rebounded and exceeded expectations, pushing China's annual trade surplus to exceed 1 trillion US dollars for the first time. In recent months, driven by loose monetary policy and supply constraints, industrial metal prices have continued to rise. Copper prices have risen by over 30% so far this year, and concerns about a series of mine shutdowns and shortages of copper supply outside the US have boosted copper prices, as traders rush to the US market to buy copper before potential tariffs next year. Additionally, long-term growth in the renewable energy industry will support copper prices. CITIC SEC analysts previously pointed out in a report that there may be a shortfall of 450,000 tons in global refined copper supply by 2026, partly due to hoarding behavior in the US. The analysis team of CITIC emphasized that copper prices need to average above $12,000 per ton next year to attract new mining investment and ensure sufficient long-term supply. The latest copper market report from ING shows that the global copper market in 2025 is experiencing a "tight balance" game dominated by the supply side, with a price floor now raised above $11,000 per ton. Whether it can continue to exceed this level will depend on Chinese demand. ING anchors the average LME copper price in 2026 at $11,500 per ton, with a rhythm of first rising then falling: the second quarter will see the strongest oversupply effect in inventories, and tight spot supply may push prices to a high of $12,000; in the second half, clarity on tariffs, if exemptions are realized, may lead to a retraction of the premium, and copper prices may moderate. Citigroup and JPMorgan have also joined the bullish camp. Citigroup analysts stated in a report that under their basic assumptions, copper stocks are accumulating in the US while shortages are forming outside the US, with an average price of $13,000 in the second quarter. In addition, JPMorgan predicts that by the second quarter of 2026, copper prices could reach $12,500 per ton, averaging around $12,075 for the year. However, Goldman Sachs and others are more cautious, believing that the recent breakthrough of copper prices above $11,000 per ton may be temporary, with short-term price increases mainly based on future expectations rather than current fundamentals. Goldman Sachs expects copper prices to fluctuate between $10,000 and $11,000 per ton in 2026. Peter Taylor, an analyst at Macquarie Group, also stated that while copper prices are expected to remain "volatile" and may easily reach new highs, prices above $11,000 per ton are not sustainable, as the global market is not tight at the physical level.