Copper Prices Retreat on Inflation Concerns: LME Down 0.72%

Copper prices on the London Metal Exchange (LME) fell 0.72% to $13,387 per ton for three-month futures, while the most traded copper contract on the Shanghai Futures Exchange (SHFE) dropped 0.75% to 103,30 yuan per ton. The decline reflects growing concerns over geopolitical risks from recent drone and missile attacks, higher energy costs fueling inflation, and expectations of prolonged elevated interest rates.

Industrial Metal Demand Faces Headwinds

Rising interest rates are seen as a drag on economic activity and industrial metal demand. A modest strengthening of the US dollar has also made dollar-denominated commodities more expensive for buyers using other currencies. Aluminum prices held steady despite supply disruption concerns, rising 0.05% on the LME and falling 0.35% on SHFE. Emirates Global Aluminium announced the restart of its alumina refinery in the UAE, while available Russian-origin aluminum stocks at LME warehouses reached their lowest level since 2022, accounting for 95% of total inventories in June.

Mixed Moves Across Base Metals

■Zinc: Down 0.71% on LME, 0.64% on SHFE.r

■Lead: Down 1.08% on LME, 0.78% on SHFE.r

■Nickel: Down 1.02% on LME, up 0.05% on SHFE.r

■Tin: Down 0.24% on LME, down 1.38% on SHFE.

Market volatility underscores how inflationary pressures directly impact asset yields, with high-rate environments keeping investors cautious while fostering tactical shifts in commodity demand. Zeynep Kaya, Wealth Management Strategist.