Price trend

Data from SunSirs shows that a major mudslide at the Grasberg mine, an Indonesian subsidiary of US mining giant Freeport McMoRan, has driven a sharp rise in global copper prices. As of September 25, the price of copper was 82,435 RMB/ton, up more than 2,000 RMB/ton from the previous day, a daily increase of 2.97% and a year-on-year increase of 5.91%.

The world's second-largest copper mine halted production, triggering a "black swan" event

On September 24, US mining giant Freeport-McMoRan, the world's second-largest copper mine, declared force majeure on its supply contracts. This sudden development, quickly labeled a "black swan event" by Wall Street, ignited market concerns about a long-term copper supply shortage and sent copper prices soaring.

Freeport confirmed that a landslide at its Grasberg Block Cave mine in Indonesia on September 8th had killed two workers, with five others still missing. Approximately 800,000 metric tons of wet material suddenly surged into the mine, affecting multiple levels, an unprecedented event in the company's decades-long mining history.

New York copper surged 4%

Driven by expectations of supply disruptions, COMEX copper futures rose nearly 4% to $4.825 per pound by late New York trading on Wednesday, approaching the peak of $5.830 on July 30 and the peak of $5.957 on July 24. Three-month copper prices on the London Metal Exchange jumped 2% to $10,172 per ton.

Huge impact:

Copper and gold production could plummet by 35% in 2026: The impact of this outage is far from short-term. Freeport's preliminary assessment indicates that it has lowered its third-quarter copper and gold sales guidance by 4% and 6%, respectively, compared to its July 2025 outlook. Furthermore, the company anticipates that copper and gold production in 2026 could plummet by approximately 35% compared to its previous estimate. Crucially, the company anticipates a return to pre-accident production levels until 2027 at the earliest, casting a shadow over the global copper-dependent electric vehicle and renewable energy industries.

Further losses in the future may reach 2 million tons: Goldman Sachs' commodities team called the Grasberg mine outage a "black swan event." Analyst James McGeoch noted that the impact of the outage is significant, with the market expected to lose 500,000 tons of copper over the next 12 to 15 months, with a potential loss of another 1 to 2 million tons. He described the impact as equivalent to "the simultaneous shutdown of the Cobre, Komao, and Los Bronces mines."

Lengthy recovery period: According to Freeport, approximately 800,000 metric tons of wet material suddenly flooded the Grasberg underground mine, a scale "unprecedented" in the company's decades of mining history. The accident not only occurred in the "PB1C" production area of the GBC mine, but also damaged the infrastructure needed to support other production areas, including railways, ore chutes, and power systems. Freeport estimates that the unaffected mining areas will not be able to restart until mid-fourth quarter of 2025 at the earliest, while the Grasberg mine will begin a phased recovery in the first half of 2026. Freeport does not expect to return to pre-accident production levels until 2027 at the earliest.

Fundamentals

Refined copper surplus turns to shortage

UBS also predicts that the global refined copper supply and demand will be 27.853 million tons and 27.586 million tons respectively in 2025, with a slight surplus of 267,000 tons. After taking into account the Grasberg shutdown, refined copper will become in short supply by 421,000 tons in 2026, and the supply gap will gradually expand thereafter.

Frequent Mine Disturbances

In addition to the impact of the Federal Reserve's interest rate cuts and export policies on copper prices this year, supply disruptions at the mines have also occurred frequently. For example, in February of this year, Chile, a major copper producer, experienced a strike that lasted several weeks, followed by a nationwide power outage that led to mine shutdowns. In late May of this year, a mine earthquake at the Kamoa-Kakula mine, the world's fourth-largest copper mine, led to a downward revision of its 2025 production guidance from 520,000-580,000 tons to 370,000-420,000 tons.

On the Demand Side

High copper prices will undoubtedly dampen consumption in some traditional sectors, placing significant cost pressure on downstream companies like home appliances and infrastructure. However, robust demand from the construction of artificial intelligence computing centers and the new energy sector provides strong support.

LME copper stocks fell

According to data from SunSirs, LME copper inventories have recently declined slightly. As of the 25th, LME copper stocks stood at 144,425 tons, down 9.1% from the beginning of the month.

Future outlook:

The Indonesian mine accident has led to a decline in supply expectations, raising concerns about further deterioration in copper mine supply, which has boosted copper prices significantly. Continued pre-holiday stockpiling in China and growing calls for anti-involution policies were supporting copper prices. Coupled with the upcoming long holiday, downstream investors were eager to stock up, but the surge in copper prices dampened their appetite for further inventory buildup, with downstream buyers purchasing only based on immediate orders. This has put downward pressure on spot premiums. With the increasing shortage of copper concentrate and the expectation of industrial policy, copper prices are expected to have room to rise.

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