Copper: El Niño risks cap African supply growth – Societe Generale

FXStreet Insights Team FXStreet

Societe Generale’s Commodity Compass, authored by Michael Haigh and Jeremy Sellem, highlights how El Niño 2026-2027 could constrain copper output in the African Copperbelt. With hydropower providing most electricity in the DRC and Zambia, the report warns that drought-driven power shortages and already slowing mine growth may leave Copperbelt production flat at best through H1 2027 before improving later.

El Niño threatens Copperbelt expansion

"El Niño Could Stall Copper Supply Growth in 2027. Major El Niño episodes have consistently coincided with weaker Copperbelt production. Output declined in the DRC in 2016 and in Zambia in 2019 and 2023, while growth stalled in 2015."

"Today, the RONI index is approaching 1997-98 levels, making the current episode one of the strongest on record. We estimate rainfall could fall 30cm below last year while temperatures rise almost +1°C, putting additional pressure on river levels and hydropower generation."

"Consensus expects copper output growth of +200 kt in the DRC and +70 kt in Zambia this year, yet year-to-date trends point to only +90 kt and +20 kt, respectively. With the climate anomaly likely to remain elevated through H1 2027, we believe Copperbelt production growth could be flat at best before conditions begin to improve from Q3 2027 onward."

"Looking into H1 2027, we expect the RONI anomaly to remain above +0.5°C, as observed in both 1998 and 2024. If history is any guide, this would leave copper production flat at best on a year-on-year basis. Conditions should start improving from Q3 2027 onwards as the climate anomaly fades."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD remains depressed near 0.6950 after RBA minutes

AUD/USD attracts follow-through selling during Tuesday’s Asian session, looking to extend the overnight rejection slide from 0.7000, or a two-week top, following the release of RBA meeting Minutes. The US Dollar retains a bullish undertone near its highest level since April 2025 as energy-driven inflation risks keep December Fed rate hike bets firmly on the table. Adding to this, geopolitical risks further underpin the safe-haven USD.

USD/JPY extends retreat below 158.50 as intervention risks loom

USD/JPY is dropping below 158.50 in the Asian session on Tuesday, snapping a two-day winning streak and pulling back from an over two-week top touched the previous day, despite Japan's soft PPI inflation print. Bulls turn cautious amid speculation that authorities will step in to prop up the Japanese Yen, which, in turn, weighs on the pair.

Gold clings to gains just below $4,200

Gold fades Monday’s small pullback and picks up renewed pace, briefly flirting with the key $4,200 mark per troy ounce. The precious metal’s recovery comes in line with the fresh downward trend in the Greenback in combination with shrinking US Treasury yields across the board and easing tensions on the geopolitical front.

Bitcoin rebounds despite cautious sentiment

Bitcoin rebounds over 2%, trading above $83,500 on Tuesday, recovering the previous day’s losses. Persistent geopolitical tensions and mixed signals continue to weigh on risk appetite, keeping investors cautious despite BTC’s recovery.

US – Midterm update: Democratic lead holds three weeks before election

With three weeks until the US midterm election on 3 November, prediction markets are more or less unchanged. Polymarket continues to put the probability of a Democratic sweep at 60-65%. The House is seen as a fairly safe Democratic win, with a probability of around 90%.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?