LONDON: Copper prices steadied on Wednesday due to a softer dollar ahead of a Federal Reserve decision on U.S. interest rates while the intensifying conflict in the Middle East and its impact on growth and demand dominated the mood.
Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $9,691 a metric ton at 1001 GMT.
With the Federal Reserve’s decision on interest rates just hours away and U.S. markets closed on Thursday for the Juneteenth holiday, activity in metals is subdued, traders said.
Oil prices risen over the past few days as markets assessed the chances of supply disruptions from the Iran-Israel conflict.
The U.S. military is bolstering its presence in the region, Reuters reported, sparking speculation of U.S. intervention that investors fear could widen the conflict in an area replete with energy resources, supply chains and infrastructure.
“Copper and other industrial metals came under pressure … reflecting the idea that global growth is at risk because of the oil price spike,” said Panmure Liberum analyst Tom Price.
Copper eases on growth concerns, firmer dollar
“We haven’t got an end to the conflict, but they are already talking about one, so the market is sort of settling down and going back to trading as it would normally.”
Elsewhere, concerns about copper availability in the LME system due to falling stocks, large holdings of warrants – title documents conferring ownership - and cash contracts has pushed up the premium for nearby contracts.
Copper stocks in LME registered warehouses at 107,350 tons have dropped 60% since March and are at their lowest since May 2024.
The backwardation or premium for the cash over the three-month copper contract was near $150 a ton, its highest since October 2022 compared with a discount at end-April.
Traders are also watching a large holding of aluminium warrants and futures contracts nearing maturity, which has also created premiums for nearby contracts.
Three-month aluminium was down 0.3% at $2,541, zinc slipped 0.1% to $2,635, lead rose 0.1% to $1,977, tin climbed 0.8% to $32,525 and nickel advanced 0.6% to $15,015.
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