Copper prices traded sharply higher on the Multi Commodity Exchange (MCX) on Monday, rising nearly 2% in early trade, tracking strength in global markets amid concerns over tightening supply and growing expectations of U.S. interest rate cuts.
Supply worries drive global copper rally
The rally in copper is being driven primarily by fears that the United States could impose an import levy on copper, according to analysts at ANZ. Market participants are worried that any tariff-related action could lead to a rush of copper shipments into the U.S., tightening inventories in other regions and creating supply stress in the global market.
This concern has already started influencing trade flows, with investors factoring in potential disruptions to availability outside the U.S., lending support to prices across exchanges.
Global prices firm as investors track U.S. policy signals
In international markets, the three-month copper contract on the London Metal Exchange (LME) was trading about 0.8% higher at around $13,104.50 per tonne. The firm global cues supported domestic prices, pushing MCX copper higher in tandem.
Adding to the bullish sentiment are expectations of U.S. interest rate cuts. Recent data showed that U.S. employers added fewer jobs than expected in December, signalling a cooling labour market. While the unemployment rate has not deteriorated sharply, softer employment growth has strengthened bets that the U.S. Federal Reserve could begin easing monetary policy this year.
Why rate cuts matter for copper
Lower interest rates typically weaken the U.S. dollar and improve liquidity conditions, making dollar-denominated commodities like copper more attractive to investors. As a result, expectations of rate cuts often support industrial metal prices, especially when combined with supply-side risks.
With supply concerns and macroeconomic factors aligning, copper prices have found strong near-term support, leading to the nearly 2% jump on MCX today.