METALS-Copper rises as supply woes offset pressure from stronger dollar

By Brijesh Patel

Oct 7 (Reuters) - Copper prices rose on Tuesday on concerns over supply from top producer Chile and major supplier Indonesia, although a stronger U.S. dollar kept the gains in check.

Three-month copper on the London Metal Exchange CMCU3 rose 0.3% to $10,679.50 per metric ton by 0717 GMT. On Monday, the metal hit its highest since May 2024 before easing.

Miner Freeport FCX.N said on Sunday that five workers, missing since a mud flow disaster at the Grasberg copper and gold mine in Indonesia last month, were found dead.

"This tragic event, combined with ongoing tightness at other major copper-producing sites, has injected a firm floor under prices," Fawad Razaqzada, market analyst at City Index and FOREX.com, said in a note.

"With U.S. inventories still elevated yet tightening slowly, traders appear confident that near-term supply constraints could offset that."

As the world's second-largest copper mine, Grasberg accounts for 3% of global concentrate production.

Operational suspensions at Grasberg, coupled with disruptions at Kamoa-Kakula in the Democratic Republic of Congo and the El Teniente mine in Chile, suggest supply concerns are likely to persist this year.

Analysts estimate the disruptions could result in a loss of 591,000 tons of copper output between September 2025 and 2026 end, prompting Goldman Sachs, Citi and Bank of America to raise their price forecasts.

Meanwhile, Indonesia's mining ministry on Tuesday issued a new regulation that shortens the validity of mining production quotas to one year from three years, a move intended to offer the government more control over output levels and support commodity prices.

Chile's copper output fell 9.9% year-on-year in August after an accident at Codelco's flagship mine on July 31.

Keeping gains in check, the dollar index .DXY extended gains against its rivals. A stronger dollar makes greenback-denominated assets more expensive for holders of other currencies. FRX/

Among other London metals, aluminium CMAL3 fell 0.4% to $2,714 a ton, nickel CMNI3 eased 0.2% to $15,450, lead CMPB3 was flat at $2,004.5, tin CMSN3 lost 0.3% to $36,615, while zinc CMZN3 slipped 0.2% to $3,001.50.

Chinese markets are closed from October 1 to 8 for the Golden Week holiday.

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