METALS-Copper rises to record high on rate cut, tight ex-US stocks

By Polina Devitt

LONDON, Dec 11 (Reuters) - Copper prices rose to an all-time high on Thursday after the U.S. Federal Reserve cut interest rates and the dollar fell, while continuing flows of copper into U.S. inventories led to worries about tighter supply in the rest of the world.

Benchmark three-month copper CMCU3 on the London Metal Exchange gained 2.9% to $11,894.50 per metric ton by 1701 GMT after hitting a record high of $11,906.

Heading for its biggest annual gain since 2009, the metal, used in power and construction, is up 35% so far this year due to mine supply disruptions and outflows of copper to the U.S.

"The only reason why copper has been rallying is because of the market perception that there are going to be tariffs on U.S. copper imports announced sometime in the middle of next year to be implemented from early 2027," said BNP Paribas analyst David Wilson.

That keeps the CME-LME arbitrage 0#LMECMXCU: open, attracting the metal to the CME stocks HG-STX-COMEX, which soared this year. BNP Paribas estimates that there is also over 500,000 tons of copper off the exchange inventory in the U.S.

Meanwhile, visible global exchange inventory is up over 40% year-on-year. Wilson said, "So, this idea that there's no copper is misleading, but this draw of copper units into the U.S. is creating a perception of the ex-U.S. tightness."

Copper demand in top metals consumer China is heading for a decline within single-digit percentage points year-on-year in the fourth quarter, he added.

The Fed rate cut of 25 basis points on Wednesday kept the dollar on the back foot on Thursday. A weaker U.S. currency makes dollar-priced metals more attractive for buyers using other currencies. FRX/

The LME complex was mostly buoyant. Zinc CMZN3 was up 4.3% at $3,213 a ton after hitting $3,219.5, the highest since October 2024, while tin CMSN3 was up 4.5% at $41,725 after touching $42,000 for the first time since April 2022.

Aluminium CMAL3 rose 1.3% to $2,903.50, lead CMPB3 added 0.5% to $1,988, while nickel CMNI3 slipped 0.1% to $14,625.