Hua Er Jie Jian Wen·2025-10-03 03:19Core Viewpoint - Copper prices on the London Metal Exchange (LME) have surged to a yearly high, driven primarily by supply disruptions rather than demand growth, raising concerns about the sustainability of the current bull market [1][3][6] Supply Disruptions - Recent supply disruptions include a significant incident at Freeport-McMoRan's Grasberg copper mine in Indonesia, which declared force majeure after a mudslide, tightening market supply expectations [1][4] - Other notable supply interruptions occurred at Hudbay Minerals' Constancia mine in Peru due to social unrest, and flooding at the Kamoa-Kakula mine in the Democratic Republic of Congo [3][4] Demand Factors - Emerging narratives around demand, particularly from AI data centers and electrical grid upgrades, are contributing to the bullish sentiment in the copper market [4][5] - Goldman Sachs predicts that by the end of this decade, construction of global electrical grids and power infrastructure will account for approximately 60% of the increase in global copper demand [5] Market Dynamics - Analysts warn that the current copper market is characterized as a "bad bull market," primarily driven by supply shocks rather than robust demand growth [6][7] - China, as the largest consumer of copper, plays a crucial role in sustaining copper prices, but current demand from China is not strong enough to support a lasting bull market [6][7] Long-term Outlook - The foundation for the current rise in copper prices is considered weak, with analysts suggesting that supply-driven bull markets are often short-lived [7] - Future supply recovery from mines like Cobre Panama could offset current supply disruptions, impacting price stability [7]