Copper falls from 3-week high as ceasefire doubts lift oil, revive growth concerns

London copper prices fell on Thursday, retreating from a three-week high, as renewed Middle East tensions cast doubt on whether the US-Iran ceasefire would hold, lifting oil prices and reviving concerns over the global growth outlook.

Benchmark three-month copper on the London Metal Exchange was down 0.6% at $12,630 a metric ton by 0303 GMT, after hitting its highest level since March 18 on Wednesday.

In contrast, the most-active copper contract on the Shanghai Futures Exchange gained 0.5% to 97,740 yuan ($14,297.31) a ton, its highest since March 18.

Israel struck Lebanon on Wednesday, killing hundreds of people and drawing a threat of retaliation from Iran, which suggested it would be “unreasonable” to proceed with talks to forge a permanent peace deal with the US

Oil prices rose over 2% to $97 a barrel on Thursday on concerns that supply from the key Middle East producing region may not fully resume and as the crucial Strait of Hormuz would remain restricted.

“We are seeing some natural profit-taking after yesterday’s strong rally. This, combined with oil heading higher today is applying downward pressure on metal prices,” said Tim Waterer, chief market analyst, KCM Trade.

Higher energy prices have dampened the outlook for metals by raising concerns that an energy shock could squeeze global growth and manufacturing.

  “Recent geopolitical escalations and the impact of higher energy costs make for a more challenging backdrop (for copper). Further, near-term market signals reflect softness, with a wide nearby contango and the sustained build in LME inventories,” Standard Chartered said on Wednesday.

London aluminium fell 0.1% to $3,451.50 a ton, and the most-traded Shanghai contract lost 0.5% to 24,555 yuan a ton.

  Elsewhere on the LME, tin fell 1.4%, zinc gained 0.1%, lead was unchaged and nickel lost 0.4%.

 Among other SHFE base metals, zinc fell 0.3%, lead was down 0.2%, tin lost 0.7%, while nickel gained 0.5%.