Singapore - Copper edged down on Wednesday morning as geopolitical tensions and macroeconomic concerns counterbalanced support coming from potential U.S. tariffs.
Benchmark three-month copper on the London Metal Exchange was down 0.36% at $13,566.5 a metric ton as of 0300 GMT. Onshore most-traded copper on the Shanghai Futures Exchange fell 0.38% to 104,010 yuan a ton, equivalent to $15,354.52 per tonne.
Oil prices rose after the United States launched new strikes on Iran, and the conflict in the Middle East has lifted energy costs while putting pressure on manufacturing activity - a central source of copper demand.
Official data released on Wednesday showed China’s producer prices increased for a third consecutive month in May, reaching their highest level since 2022. The uptick was attributed in the data to rising commodity prices and stronger demand in select industries.
Inflation concerns remained prominent, with market participants awaiting U.S. inflation figures due later in the day. Those inflation dynamics matter because better-than-expected U.S. jobs data last Friday strengthened the dollar and heightened expectations of a Federal Reserve rate increase this year. Higher interest rates typically reduce demand prospects for growth-sensitive industrial metals such as copper.
At the same time, traders continued to factor in potential U.S. tariffs on copper imports, which have been expected to be decided in the second half of the year. The U.S. has discussed a possible 15% levy on copper imports from the start of 2027, followed by a 30% tariff from 2028, and those prospects have lent some support to prices.
London Metal Exchange data showed total copper stocks in LME-registered warehouses have fallen every day since May 28, underscoring a tightening of available metal in exchange warehouses.
Other LME-traded base metals also moved lower: aluminium dropped 1.54%, zinc lost 0.58%, lead fell 0.55%, nickel declined 0.77% and tin slipped 1.86%.
On the Shanghai Futures Exchange, the moves were similarly downward for a number of metals, with aluminium down 0.89%, zinc off 0.2%, lead down 0.59%, nickel lower by 2.19% and tin down 2.16%.
Currency conversion used in price reporting was $1 = 6.7739 Chinese yuan renminbi.
Key Points
- Copper prices dipped 0.36% on the LME to $13,566.5 per metric ton; Shanghai most-traded copper fell 0.38% to 104,010 yuan per ton.
- Geopolitical tensions in the Middle East and stronger U.S. jobs data lifted oil prices and the dollar, pressuring demand-sensitive industrial metals.
- Expectations of U.S. tariffs on copper imports and a continuous decrease in LME-registered copper stocks provided underlying price support.
Risks and Uncertainties
- Escalation in the Middle East conflict could further raise energy prices and strain manufacturing, reducing copper demand.
- Higher-than-expected U.S. inflation or stronger labor data may increase the likelihood of Fed rate hikes, which could dampen demand for growth-dependent metals.
- Policy developments around U.S. copper tariffs - timing and final structure - remain uncertain and could materially influence market pricing.