Insights 
VT 
Metals have seen a positive trend, with Copper trading near record levels alongside a rising US dollar, rate cuts, and low inventories. Copper’s prices have surged over 20% this year, despite trade tension concerns, influenced by the US Federal Reserve’s easing cycle and supply disruptions.
A major recent disruption is the declaration of force majeure by Freeport at the Grasberg mine in Indonesia, impacting 4% of global production. Despite mixed short-term demand signals due to ongoing US-China trade negotiations, the long-term outlook for Copper maintains a positive trajectory, propelled by structural demand from electrification and renewable investments.
China’s response to high prices includes increased shipments abroad, as indicated by Bloomberg. While short-term demand indicators fluctuate, ongoing supply disruptions are expected to maintain a support level around $10,000/t. For continued growth, Copper requires strong demand, especially from China, the largest consumer, though in the short term, prices are expected to stay within a certain range.
We’re seeing copper prices hold firm above the $10,000 per tonne level, largely because of ongoing supply issues like the unresolved force majeure at the Grasberg mine. LME warehouse stocks are critically low, currently hovering near 55,000 tonnes, which is keeping the market tight. This supply squeeze provides a strong floor for prices in the near term.
The main headwind remains uncertain demand, particularly from China, which seems sensitive to these elevated prices. Recent data supports this, with September 2025 copper imports showing a 3% dip from the previous month. This buyer hesitation is likely to cap any significant upward momentum for now.
Given this expected range-bound behavior, traders might consider strategies that profit from low volatility in the coming weeks. Selling strangles or establishing iron condors on December 2025 contracts could be effective if we expect prices to remain between $9,800 and $11,000. These positions benefit from time decay as long as the price doesn’t make a major move.
For those who believe in the longer-term bullish story driven by electrification and AI, a more cautious approach is warranted. Using bull call spreads on early 2026 contracts allows for participation in a potential upside rally while defining the maximum risk. This strategy aligns with the view that while the immediate future is cloudy, the underlying structural demand is strong.
The macro environment adds another layer, with the Fed having already cut rates twice this year, which has helped weaken the US dollar. However, uncertainty about the pace of future cuts could lead to short-term volatility. This suggests that any derivative positions should be structured to withstand potential price swings.
