US Federal Reserve Signals Further Interest Rate Cuts, LME Copper Prices See Significant Overnight Volatility.

Market analysis shows that the prices of copper and other base metals are being directly affected by the US Federal Reserve’s (Fed) monetary policy, especially following signals of interest rate cuts.

The Impact of Fed Monetary Policy

The Fed’s signal to continue cutting interest rates in the future has created a wave of optimism in the market. This weakens the US dollar (USD), which is often considered a safe-haven asset. When the USD is weaker, commodities priced in this currency, including copper, become cheaper for buyers using other currencies. This, in turn, boosts demand and supports prices.

Experts believe that the Fed’s accommodative monetary policy will facilitate lower borrowing costs globally, stimulating investment in infrastructure, renewable energy, and manufacturing—industries that are major consumers of copper. This creates a strong, long-term demand.

Copper Price Movements on the LME and SHFE

Information on copper prices from the two main exchanges, the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE), shows volatility and fluctuations around key price points. On September 24, 2025:

  • LME copper prices opened at $9,976 per ton, fluctuated, and closed at $9,990 per ton, a slight decrease of 0.08%. This price level suggests the market is in a period of accumulation and searching for a clear direction. High trading volume and open interest indicate that investor interest remains very strong.
  • SHFE copper prices followed a similar trend, opening at CNY 79,980 per ton and closing at CNY 79,970 per ton, a 0.04% increase. This reflects a cautious sentiment among Chinese investors ahead of the holiday, with slow inventory building.

Despite the macroeconomic support, copper prices have not broken out significantly. The reason is that actual downstream demand has not seen a sudden increase. Manufacturing companies are hesitant to build up inventory because copper prices remain high (around CNY 80,000 per ton), leading to sluggish spot market transactions.

Expert Forecasts and Assessments

In the short term, copper prices are expected to continue to fluctuate around the CNY 80,000 per ton level (or its equivalent) as the market weighs positive macroeconomic factors against the lack of a significant breakthrough in real demand.

However, the long-term outlook for copper prices is considered more positive. Supporting factors include:

  • Fed’s accommodative monetary policy: Continued interest rate cuts will maintain a favorable financial environment, encouraging investment and production.
  • Demand from the energy transition: The growth of electric vehicles, energy storage systems, and global power grid infrastructure will strongly drive demand for copper.
  • Supply constraints: New mining projects take time to become operational, while existing mines face numerous challenges, creating a risk of future supply shortages.

A specific example is Atico Mining’s La Plata mining project in Ecuador, with significant reserves protected by an investment agreement, which will contribute to the global supply. However, unexpected factors such as natural disasters (like Typhoon “Hagibis” in China) could temporarily disrupt the supply chain, causing short-term price volatility.

Copper prices are likely to maintain a positive trend, bolstered by macroeconomic factors and long-term demand from growing industries.

According to: metal newspaper