LONDON: Copper sank to its lowest in three weeks on Wednesday as hostilities in the Middle East and concerns about the implications for global economic growth outweighed the market impact of reduced inventories.
Benchmark three-month copper on the London Metal Exchange was down 0.7 percent at USD13,521 a metric ton as of 1600 GMT. It touched a session low of USD13,395, its weakest since May 20, before clawing back ground after US inflation data calmed nerves.
Iran’s Revolutionary Guards said they had carried out missile and drone attacks on US military bases in Jordan, Kuwait and Bahrain on Wednesday in retaliation for US strikes on Iranian targets around the Strait of Hormuz.
US President Donald Trump subsequently vowed to attack Iran “very hard” if no peace deal is finalised. The tit-for-tat action is dominating markets, said SP Angel analyst John Meyer, adding that the dollar was strong. That makes dollar-denominated metals more expensive for holders of other currencies and can depress prices.
“Expectations for inflation are rising,” Meyer said. “China has been exporting deflation for many years, and now it will export more inflation.” Factory-gate inflation in China, the world’s biggest metals consumer, rose for a third straight month in May to its highest since 2022.
US consumer inflation meanwhile grew at its fastest pace in three years, in line with expectations. The data gives the Federal Reserve more reason to keep interest rates unchanged into 2027.
LME copper stocks decreased by 3,075 tons to 369,975 tons, the lowest level since April 1.
Furthermore, cancelled warrants - or stock to be withdrawn from warehouses and unavailable to the market - make up almost 38 percent of the total, the highest ratio since December.
The entire LME complex traded lower. Aluminium shed 2 percent to USD3,477 a ton and hit its lowest since April 30, while zinc slipped 1.9 percent to USD3,485 and nickel slid 1.7 percent to USD17,750, touching its lowest since April 13.
Lead lost 1 percent to USD1,963, hitting a one-month low, and tin also dipped 1 percent to USD51,990.
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