Copper slides on inflation‑driven rate‑hike expectations
London Metal Exchange (LME) copper futures slipped 0.3% to $14,193 a tonne by 10:05 a.m. Singapore time, after falling as much as 0.6% earlier in the session. The decline marks the first weekly drop for copper since June and follows a surprise rise in US consumer‑price inflation that has revived market expectations of a Federal Reserve rate increase at its meeting later this week.
Broader metal market under pressure
The dollar’s recent strength and a broader risk‑off mood pulled other major base‑metal contracts lower. Zinc futures were down 0.7%, while aluminum held steady and iron ore fell for the fourth consecutive session, slipping 0.4% to $97 a tonne.
Spot‑future premium narrows
The premium that spot copper commands over the three‑month forward contract narrowed sharply to $4.50 a tonne, down from wider gaps seen in previous weeks. Analysts at Sucden Financial said the reduction in speculative long positions, combined with easing prompt‑month tightness, suggests copper will likely trade in a choppy range until a fresh macro or fundamental catalyst emerges.
Recent rally explained
Last week copper surged to an all‑time high on the LME, driven by speculation that the United States might impose tariffs on refined metal imports. Traders pre‑emptively shipped copper to the US in anticipation of higher domestic prices. In addition, optimism about demand from data‑center construction, renewable‑energy projects, and supply disruptions at key mines had bolstered the metal’s outlook.
Outlook for the coming days
Market participants will watch the Fed’s policy decision closely. A confirmed rate hike would typically weigh on non‑yielding assets such as copper, while any dovish tone could revive buying interest. Further US inflation releases and any developments in trade policy will also shape price direction.
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*All figures are quoted in US dollars per metric tonne.*