Supply Squeeze Keeps London Benchmark Above USD 14,000
Copper prices surged near record highs on Tuesday. An unexpected operational halt at Indonesia’s Gresik smelter triggered this jump. The facility processes critical ore from the massive Grasberg mine. This outage compounds an ongoing supply deficit. London Metal Exchange benchmark prices remain elevated above USD 14,000 a tonne. Buyers face immediate physical scarcity. Widening cash premiums and warehouse withdrawals reflect this trend.
Meanwhile, the aluminum market experienced sharp upward momentum. Consequently, prices jumped to a seven-week high. Specifically, a major production cut at Norsk Hydro’s Alunorte refinery in Brazil caused this move. Furthermore, natural gas supply disruptions halved output at the facility. In addition, logistics constraints and Middle East tensions also affect regional output. As a result, global market tightening continues to drive industrial metals higher.
Smelter Outage and Inventory Pressures
The primary catalyst for the copper rally is the Gresik suspension. PT Smelting operates the plant following a boiler leak. Mitsubishi Materials confirmed the indefinite shutdown for repairs. Freeport’s new Manyar smelter will resume production in September. Combined output will take time to offset current deficits. Furthermore, LME warehouse inventories dropped further. This trend underscores immediate physical supply tightness.
In aluminum, Norsk Hydro’s reduction exacerbated pre-existing shortages. Middle East transit disruptions near the Strait of Hormuz caused these initial shortages. Annual global shortfalls are projected to widen significantly. Buyers across manufacturing sectors are navigating severe raw material bottlenecks.
Broader Nonferrous Market Divergence
While copper and aluminum rallied, other industrial metals experienced mixed sessions. Tin maintained high levels amid sustained yearly gains. Zinc and lead saw minor downward adjustments. Nickel lagged behind the broader nonferrous complex. Demand fundamentals failed to match supply-driven volatility. Mining equities mirrored this divergence. Major copper producers retreated alongside broader equity corrections.
Market Impact
○ Impacted Metals: Copper Cathode, Primary Aluminum, Alumina, Refined Zinc, Primary Lead, Refined Nickel
○ Direction: Bullish
○ Time Horizon: Near-term
○ Affected Industries: Electrical Equipment, Power Transmission, Construction, Automotive Manufacturing, Packaging
○ Related Price Reports: Copper Weekly Price Report, Aluminum Weekly Price Report
○ Watch Item: Monitor the restart timeline for the Gresik smelter and natural gas availability at the Alunorte refinery.
SuperMetalPrice Commentary:
The convergence of smelter outages and refinery cuts highlights the extreme fragility of current metal supply chains. As physical inventories dwindle, industrial buyers must prepare for persistent price volatility and tighter near-term availability across primary base metals.
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