LONDON: Copper prices retreated on Wednesday after fresh hostilities in the Middle East dampened hopes for an imminent resolution between Washington and Tehran and lifted the dollar, though the prospect of US tariffs helped limit losses.
Benchmark three-month copper on the London Metal Exchange slipped 0.8percent to USD13,930 a metric ton in official open-outcry trading. It had touched its highest in more than two weeks in the previous session, when it gained 1.5 percent. 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 US futures fell slightly as oil prices rose for a third session after US-Iran peace talks stalled. The OECD warned on Wednesday that a protracted war could drag on global growth and push up inflation, which analysts fear would also curb metals demand. Skirmishes in the Middle East have bolstered demand for the dollar, making commodities priced in the US currency more expensive for buyers using other currencies.
Copper prices were supported, however, by speculation that the US may impose tariffs on refined copper ahead of a June 30 deadline to make a determination. US Comex copper futures dropped 1.1percent to USD6.60 per lb, bringing the premium of Comex over LME copper to 4.6percent, or USD635 a ton.
That premium has been attracting flows of metal to the US 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. LME zinc edged down 0.1percent in official activity to USD3,639 a ton, having earlier hit its strongest since August 2022 at USD3,658 on the back of buying by computer-driven CTA funds due to tight supplies of concentrate, broker Marex said in a note.
Among other metals, LME aluminium fell 0.8percent to USD3,721 a ton, lead gave up 0.5percent to reach USD2,034, nickel dropped 1.3percent to USD18,990 and tin shed 1.3percent to USD57,200.
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