Copper and other industrial metals declined on Thursday as the US dollar strengthened following the release of US inflation data that did not shift expectations for the Federal Reserve's September interest rate decision. The benchmark three-month copper contract on the London Metal Exchange fell 0.32% to $14,086.5 per metric ton at 0300 GMT. The Shanghai Futures Exchange's most traded copper contract declined 0.55% to 107,580 yuan (approximately $15,951.72) per ton.
Investors assessed that the mild US consumer inflation data for July was insufficient to alter the Federal Reserve's hawkish stance. The US Dollar Index rose 0.05% to 100. Strong demand for US treasuries supported the dollar, weighing on greenback-denominated commodities and making them more expensive for international buyers using other currencies.
David Wilson, head of commodity strategy at BNP Paribas, noted that significant quantities of metal continue to flow into the United States. The Yangshan copper premium, a key barometer of China's import demand, fell to its lowest level in four weeks on Wednesday, further pressuring the red metal. Inventory outflows at the London Metal Exchange supported copper prices amid uncertainty surrounding potential US tariffs on refined copper imports.
Despite these supportive factors, the stronger dollar limited upside gains. Aluminium prices dropped nearly 1% on both the LME and Shanghai Futures Exchange, marking the second consecutive decline after a seven-session rally. Supply concerns eased as prospects improved for Middle East aluminium production, a major global supplier, with anticipated recovery of war-damaged smelting capacities.
However, the impasse in peace negotiations between Iran and the United States continues to create uncertainty regarding traffic through the Strait of Hormuz. Wilson stated that while smelters from the Gulf are shipping materials through alternative routes via Saudi Arabia and Oman, there remains uncertainty regarding a potential peace agreement. Other industrial metals also retreated.
Zinc fell 0.64% on the LME and 0.29% on the Shanghai Futures Exchange. Lead slipped 0.24% on the LME while gaining 0.57% on the SHFE. Nickel dropped 0.93% on the LME and 0.27% on the Shanghai Futures Exchange.
Tin lost 0.69% on the LME and 0.96% on the SHFE. Source: Reuters
Source: energynews.oedigital.com