Copper declines on dollar rally despite Grasberg worries

Group 1 - The copper sector is experiencing tighter supply due to disruptions at major mines, particularly Indonesia's Grasberg, which is the world's second-largest copper mine. Freeport-McMoRan Inc. has declared force majeure at this operation after mud floods affected underground tunnels and has reduced production guidance [1][7]. - Copper prices have dropped 0.7% to $10,639.50 per ton, following a significant weekly gain, while most other metals remained flat or slightly lower. Iron ore prices were stable at $103.90 per ton. Trading volumes are expected to be lower due to a Chinese holiday [6][7]. - The Federal Reserve Bank of Dallas President Lorie Logan indicated that the central bank is further from its inflation target than from its maximum employment goal, suggesting a cautious approach to rate cuts. Looser monetary policy is generally favorable for non-yielding assets like copper, while also weakening the dollar [2][5][7]. Group 2 - Christopher LaFemina from Jefferies Financial Group Inc. noted that a Fed rate-cut cycle, despite a relatively strong economy, should be bullish for commodity prices. However, there is a risk of an inflationary spike in commodity prices that could negatively impact the economy [5][7]. - The focus will shift to upcoming US data releases, including jobless claims and inflation expectations, although these may be affected by the ongoing government shutdown [1][7].