LONDON: Copper dipped on Tuesday as Iran launched fresh attacks on US allies in the Gulf and London Metal Exchange inventories climbed to their highest in 6-1/2 years, while aluminium was lifted by concerns over supply from the Middle East.
Benchmark LME three-month copper was down 0.8percent to USD12,748.50 per metric ton as of 1015 GMT, after gaining 0.6percent in the previous session, which was interrupted by a nearly three-hour technical halt.
The war in the Gulf saw no sign of an end, as Israel said it had killed Iran’s security chief in airstrikes overnight and Tehran kept up attacks against neighbours that have pushed up energy prices, stoking inflation and growth fears. Copper stocks in LME warehouses rose to 330,375 tons, the most since late August 2019, following 13,500 tons of inflows into Kaohsiung and a further 4,900 tons into Baltimore.
The cash LME copper contract was at a steep USD102 a ton discount to the three-month forward, indicating no shortage of metal. “I would basically conclude that copper is actually doing extremely well considering the contango we have in the London market the elevated level of inventories,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“We need to see some of these stockpiles being brought down. As we’re having a prolonged conflict, that may impact the demand,” he added. The dollar strengthened, making greenback-denominated commodities more expensive for traders using other currencies. The Federal Reserve is expected to keep rates steady on Wednesday.
Aluminium rose 0.9percent to USD3,423.50 a ton as top bauxite producer Guinea considers introducing export quotas for mining firms as early as this month, while the conflict in the Middle East kept traders concerned over supply of metal.
Zinc dropped 1.6percent to USD3,216 as 21,625 tons of deliveries into Singapore took LME zinc stocks to their highest since July. Lead rose 1.1percent to USD1,925, nickel lost 0.4percent to USD17,390 and tin slid 3.5percent to USD46,560.
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