Key Moments
- Copper on the LME extended its latest bout of losses, weighed down by inflation worries tied to the Iran conflict, weaker Chinese data and a stronger USD.
- Prices have pulled back from recent highs reached just last week as macroeconomic headwinds have intensified.
- Even after the recent decline, copper remains about 8% higher year-to-date, supported by prior gains, tech-related demand, supply constraints and potential US tariff actions.
Macro Headwinds Drive Price Weakness
ING analysts Warren Patterson and Ewa Manthey note that Copper on the LME is extending its losses as concerns over inflation linked to the Iran conflict, softer Chinese economic data and a firmer US Dollar (USD) dampen expectations for industrial demand.
“Copper on the LME extended losses on Monday, pressured by inflation concerns tied to the Iran conflict and weaker Chinese data.”
“Escalating tensions between the US and Iran, along with higher oil prices, heightened fears of prolonged inflation and a tighter policy response.”
These mounting macroeconomic risks have contributed to selling pressure following a strong advance, with prices now easing from the highs reached just last week.
Price Performance and Market Supports
“The pullback comes after a strong run, with prices slipping from the recent highs hit just last week amid intensifying macro headwinds.”
Despite the recent retracement, the analysts point out that copper is still trading higher on a year-to-date basis.
“Despite the recent softness, copper remains around 8% higher year-to-date.”
This year-to-date strength has been underpinned by previous gains driven by technology-related demand, ongoing supply constraints and the prospect that potential US tariff measures could tighten global availability.
| Factor | Impact on Copper Market |
|---|---|
| Iran conflict and higher oil prices | Increase inflation concerns and expectations of tighter policy |
| Weaker Chinese data | Weighs on industrial demand outlook |
| Stronger US Dollar (USD) | Pressures dollar-denominated commodity prices |
| Tech-related demand | Supports copper prices year-to-date |
| Supply constraints and potential US tariffs | Contribute to tighter global availability |
Near-Term Outlook
The analysts emphasize that the macro backdrop is likely to remain the dominant driver in the short term.
“Near-term, copper is likely to remain under pressure as macro risks dominate.”
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