Copper pulls back as fresh attacks in the Middle East curb risk appetite
- Benchmark three-month copper on the LME was down 0.9% at $13,914 a metric ton
LONDON: Copper prices retreated on Wednesday after fresh hostilities in the Iran war punctured optimism that a resolution was imminent and lifted the dollar, though the prospect of U.S. tariffs limited the downside.
Benchmark three-month copper on the London Metal Exchange was down 0.9% at $13,914 a metric ton by 0930 GMT. It had touched its highest in more than two weeks in the previous session, when it gained 1.5%.
Gulf hostilities flared on Wednesday as diplomacy between Washington and Tehran showed little progress.
“Clearly an exchange of fire doesn’t give much confidence in the ability to get a lasting ceasefire, so the markets are moving to a risk-off environment,” said Nitesh Shah, commodity strategist at WisdomTree.
European stocks and U.S. futures fell slightly as oil prices rose for a third session after U.S.-Iran peace talks stalled.
A prolonged conflict is likely to curb metals demand as inflation rises and economic growth is dampened.
The Gulf skirmishes have bolstered demand for the dollar, making commodities priced in the U.S. currency more expensive for buyers using other currencies.
Copper prices were supported, however, by speculation that the U.S. may impose tariffs on refined copper ahead of a June 30 deadline to make a determination.
U.S. Comex copper futures dropped 1.2% to $6.60 per lb, bringing the premium of Comex over LME copper to 4.5%, or $631 a ton.
That premium has been attracting flows of metal to the U.S. and tightening supplies elsewhere.
“The premiums are relatively modest, so if we do get any rumours (about imposing tariffs), that could cause copper to explode to the upside,” Shah said.
The most-active copper contract on the Shanghai Futures Exchange gained 0.4% to close daytime trade at 106,380 yuan ($15,712.51) a ton.
Among other metals, LME aluminium slipped 0.3% to $3,742 a ton, zinc was little changed at $3,641, lead gave up 0.4% to reach $2,037, nickel dropped 1.1% to $19,045 and tin shed 0.9% to $57,450.
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