The commodities feed: Copper jumps after grasberg force majeure

LME copper prices surge to the highest in more than a year on Freeport’s force majeure.

Metals – Copper jumps after Grasberg force majeure

LME copper surged 3.6% yesterday to settle above $10,336/t (the highest since May 2024), after Freeport-McMoRan declared force majeure, meaning it would be unable to fulfil contracts to customers from its giant copper mine in Indonesia due to forces beyond its control.

Operations at Freeport’s Grasberg mine, which is the world’s second-largest copper mine, were halted nearly three weeks ago after a fatal mudslide in which at least two people died.

The mine accounted for around 3% of global copper supply this year (prior to the disruptions), nearly 30% of Freeport’s copper output and 70% of its gold production, underscoring the scale of the impact.

Freeport said it was not possible to forecast future copper and gold production from the mine and that the disaster was “likely to result in the deferral of significant production in the near-term”. It said a return to previous operational levels “could potentially be achieved” in 2027.

A prolonged disruption at the Grasberg mine could drive copper prices even higher, while intensifying supply challenges for smelters already facing feedstock shortages.

It adds to disruption in global copper supplies. Earlier this week, Hudbay Minerals announced a shutdown at its Constancia mill in Peru due to ongoing political protests.

Energy – EIA reports Oil inventory draws

Oil prices edged higher yesterday, with ICE Brent rising 2.5% (the biggest intraday gain since July) and settling above $69/bbl. The upward rally was supported by persistent risk to Russian oil supply, along with the weekly storage report from the US, which showed a larger-than-expected drop in US crude oil inventories. Recent reports suggest that two major oil ports on Russia’s Black Sea coast halted the loading of tankers following overnight warnings of drone attacks. The latest threats of attack underscore the severity of Ukraine’s constant disruptions to Russia's energy infrastructure. It is estimated that the Sheskharis and CPC facility exports well over 2m b/d of Russian and Kazakh oil to global markets, holding a major share of the world’s petroleum supply chain.

US weekly inventory numbers from the EIA yesterday were also somewhat bullish for the oil market. US commercial crude oil inventories reported declines of 607k barrels for a second consecutive week, in contrast to the market expecting a build of 232k barrels. Total oil stocks stood at a little over 414m barrels, 4% below the five-year average and are now at the lowest since January. However, the decline was lower when compared to the 3.8m barrel draw the API reported the previous day. Crude oil exports eased from their two-year peak but still stand above 4m b/d, while imports rose by 803k b/d to 6.5m b/d over the reporting week. Meanwhile, crude stocks at Cushing rose by 177k barrels after declining for two consecutive weeks to 23.7m barrels over the reporting week.

For refined products, gasoline stocks fell by more than 1m barrels and are at the lowest level since late November, while demand rose for the second straight week. This should support already wide gasoline refining margins, which are unusually strong for this time of year. Similarly, distillate fuel stocks fell by 1.7m barrels, against expectations of a 468k barrel increase.

Agriculture – China diversifying agriculture import sources

Recent reports suggest that China has ramped up its soybean purchases from Argentina this week, increasing shipments from 20 cargoes earlier to 35 cargoes, with most scheduled to load in November. Some cargoes have also been booked for shipment next year from Argentina’s new crop. This surge follows Argentina’s decision to cut soybean export tariffs from 33% to 26% last month and reflects China’s broader shift away from US agricultural sourcing. Meanwhile, in the first weeks of the US marketing season, China hasn’t booked a single American cargo (the first in USDA records dating back to 1999). China’s soybean imports from Argentina increased 87% month-on-month to 1.05mt last month, the highest since October 2024. If all booked shipments are delivered, the total volume will exceed 2.27mt, surpassing Argentina’s monthly record of 2.23mt set in July 2015.

Read the original analysis: The commodities feed: Copper jumps after grasberg force majeure