METALS-Copper rises to record high on rate cut, tight ex-US stocks

(Updates prices)

By Polina Devitt

LONDON, Dec 11 (Reuters) - Copper prices rose to an all-time high on Thursday after the U.S. Federal Reserve cut interest rates, while continuing flows of copper into U.S. inventories led to worries about tighter supply in the rest of the world.

Benchmark three-month copper on the London Metal Exchange gained 1.8% to $11,764.50 per metric ton by 1434 GMT after hitting a record high of $11,800.50.

Heading for its biggest annual gain since 2009, the metal, used in power and construction, is up 33% so far this year due to mine supply disruptions and outflows of copper to the U.S. "The only reason why copper has been rallying is because of the market perception that there are going to be tariffs on U.S. copper imports announced sometime in the middle of next year to be implemented from early 2027," said BNP Paribas analyst David Wilson.

That keeps the CME-LME arbitrage open, attracting the metal to the CME stocks , which soared this year. BNP Paribas estimates that there is also over 500,000 tons of copper off the exchange inventory in the U.S.

Meanwhile, visible global exchange inventory is up over 40% year-on-year. Wilson said, "So, this idea that there's no copper is misleading, but this draw of copper units into the U.S. is creating a perception of the ex-U.S. tightness."

Copper demand in top metals consumer China is heading for a decline within single-digit percentage points year-on-year in the fourth quarter, he added. The Fed rate cut of 25 basis points on Wednesday kept the dollar on the back foot on Thursday. A weaker U.S. currency makes dollar-priced metals more attractive for buyers using other currencies.

The LME complex was mostly buoyant. Zinc was up 3.0% at $3,174.50 a ton after hitting $3,180, the highest since October 2024, while tin was up 3.4% at $41,390 after touching $41,530, its highest since April 2022.

Aluminium rose 1.0% to $2,895, lead added 0.4% to $1,987.50, while nickel slipped 0.2% to $14,625. (Reporting by Polina Devitt; additional reporting by Tom Daly; Editing by Leroy Leo and Shailesh Kuber)