Copper advanced to the highest level in three months as bets on a pivot by the Federal Reserve and the looming shutdown of a large mine in Panama emboldened bulls.
The metal rose as much as 1.2% on Friday, tracking a rally in European and Chinese stock markets after an unexpected pickup in the country’s manufacturing activity. Bets on an early shift to monetary loosening in the US next year is also aiding sentiment as inflation continues to cool.
Copper has climbed 4.4% in November, the first monthly increase since July, as a slew of stimulus in China and the potential end of the Fed’s tightening cycle boosted the demand outlook. US rate hikes have been a major headwind to metals this year, weighing on key consumers like construction firms and manufacturers.
The turnaround comes just as the supply of copper is set to be squeezed by Panama’s plans to shutdown First Quantum Minerals Ltd.’s Cobre operation, which produces about 1.5% of the world’s supply. The mine, which has been the target of mass protests from environmentalists and labor unions, already suspended output last month after a blockade of boats restricted key supplies.
The disruption comes as the gap between demand and supply for copper ore is set to widen next year, according to BloombergNEF. Two key producing regions — Chile and Peru — are facing bottlenecks in increasing output, while demand is rising in China, it said. Copper prices are likely to remain elevated, it added.
Copper rose 0.8% to $8,528 a ton on the London Metal Exchange by 2:19 p.m. local time. Most metals were higher, with tin adding 1.9% and zinc 0.4%. Aluminum edged slightly lower.