METALS-Copper breaks above $11,000 on increased likelihood of US rate cut

By Polina Devitt

LONDON, Nov 26 (Reuters) - Copper prices rose to their highest in almost a month on Wednesday on growing expectations that the U.S. Federal Reserve will cut interest rates in December and that prices will rise further after outflows to U.S. stocks.

Benchmark three-month copper CMCU3 on the London Metal Exchange was up 1.4% at $10,966 a metric ton by 1703 GMT, after hitting $11,025 for its highest since October 30.

The metal used in power and construction hit a record high of $11,200 on October 29, boosted by worries over tighter copper supply from the Grasberg mine in Indonesia this year and next.

"Upside risks for copper are rising, with the balance tightening into 2026 amid supply challenges, low inventories and ongoing trade distortions," said ING commodities strategist Ewa Manthey.

The market found fresh support from data on Tuesday showing that U.S. retail sales rose less than expected and consumer confidence weakened, firming expectations that the Fed will cut rates soon. Lower interest rates support demand prospects for growth-dependent metals.

The global copper cathode market faces a surplus of between 350,000 tons and 400,000 tons this year, but there is a deficit of 500,000 tons of copper concentrate that will continue next year, said Nicholas Snowdon, head of metals research at trader Mercuria.

Snowdon, a high-profile copper bull, said that LME copper prices would need to rise to pull metal back to global markets from the United States, which now holds 70% of global copper cathode inventory. That could rise to 90% in the first quarter of 2026, Snowdon estimates.

Copper stocks in LME-registered warehouses MCUSTX-TOTAL are down 42% this year after massive outflows to Comex copper stocks HG-STX-COMEX.

Among other LME metals, aluminium CMAL3 rose 2.5% to $2,868 a ton, zinc CMZN3 added 2% to $3,054, lead CMPB3 was steady at $1,979.50 and nickel CMNI3 dipped by 0.3% to $14,910.

Tin CMSN3 was up 1.4% at $38,055 after hitting $38,070 for its highest since April 2 amid fund activity and ongoing worries about tighter mine supply. The premium of the LME cash tin contract over the three-month one CMSN0-3 jumped to $185 a ton, highest since April.