Insights 
VT 
Copper reached a record high due to a trading halt on the Chicago Mercantile Exchange during a volatile session. This momentum follows the CESCO Week event in Shanghai, enhancing expectations of reduced supply. Copper has surged approximately 27% this year, driven by mine disruptions and altered trade flows due to tariffs.
China’s major Copper smelters have decided to jointly decrease their Copper concentrate intake due to lower processing fees affecting margins. The China Copper Smelters Purchasing Team, comprising 13 major smelters, aims to reduce concentrate processing rates by over 10% next year. Despite these challenges, China’s Copper production remains robust.
Refined Copper output in China has been strong amid a tough feedstock market, despite low treatment and refining charges. These charges for processing ore have fallen to unprecedented lows due to a raw material shortage, with spot charges dropping to minus $60 per tonne. Similar reductions were pledged last year without major output cuts. Through October, China has produced nearly 10% more refined Copper.
The FXStreet Insights Team curates market observations from experts, incorporating insights from commercial sources and various analysts.
Copper has just broken its all-time high, pushing past $11,000 per tonne after a volatile trading session last Friday. The current market momentum is strong, fueled by a narrative of tightening supply following mine disruptions and trade tariff impacts earlier in the year. We are seeing this reflected in critically low inventories, with LME warehouse stocks now sitting under 50,000 tonnes, a level not seen in nearly two decades.
Given this bullish sentiment, traders should consider positioning for further upside in the near term. Buying call options on copper futures could capture gains from the price surge, which has already seen copper rally around 27% this year. The demand from the global energy transition remains a powerful force, with 2025 projections for electric vehicle sales continuing to support higher prices.
However, we must be cautious about the announced Chinese smelter production cuts for 2026. A similar pledge was made in late 2024, yet China’s refined copper output actually increased by almost 10% through October of this year. These smelters are reacting to historically low processing fees, but their past actions suggest output may not fall as promised.
This creates significant uncertainty, suggesting that volatility is likely to remain high in the coming weeks. Traders could use options strategies like straddles to profit from large price swings in either direction, as the market decides whether to believe the supply cut narrative or focus on actual production numbers. The key will be to watch the upcoming monthly industrial output data out of China for any real signs of a slowdown.
