LONDON: Copper prices drifted to their lowest in three weeks on Thursday as the US and Iran exchanged more attacks, prompting funds to liquidate positions on worries about higher interest rates, weaker global economic growth and softer metals demand.
Benchmark three-month copper on the London Metal Exchange was down 0.8percent at USD13,407 a metric ton by 0925 GMT, having earlier touched USD13,378, its weakest since May 20.
The US and Iran traded air attacks for a second straight day on Thursday, undermining a shaky ceasefire. “Copper’s move lower is being driven by macro headwinds rather than fundamentals. Escalating tensions in the Middle East are fuelling inflation fears and rate hike expectations,” said Ewa Manthey, commodities strategist at ING. “Unless energy prices stabilise or rate expectations soften, copper is likely to remain under near-term pressure.”
LME copper has shed about 6percent since May 13, when it hit its highest in 3-1/2 months as funds piled into the market on supply issues and bullish technical signals.
Part of the recent weakness is from funds liquidating some of their long positions, traders said. Lacklustre demand in top metals consumer China was highlighted by a 19percent fall over the past 2-1/2 weeks in the Yangshan copper premium, which reflects demand for copper imported into China, to USD59 a ton. The most-traded copper contract on the Shanghai Futures Exchange lost 1.3percent to 103,160 yuan (USD15,223) a ton, having earlier touched its lowest since May 8. Losses in copper were cushioned, however, by continued speculation about possible US import tariffs on refined copper, which has resulted in a premium on US metal and flows of material to the US, creating supply tightness elsewhere.
Available stocks in LME-registered warehouses have slid 37percent to 226,975 tons over the past two months, according to LME data. LME aluminium added 0.3percent to USD3,475 a ton on continued concern about a prolonged conflict creating shortages since the Gulf accounts for about 9percent of global smelting capacity.
Among other metals, LME zinc lost 1.2percent to USD3,451 a ton, lead dipped 0.1percent to USD1,960.50, nickel shed 0.3percent to USD17,620 and tin edged down 0.1percent to USD51,885.
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