Copper futures fell below $6.2 per pound on Friday, hitting a one-week low as the escalating conflict between the US and Iran triggered a broad selloff across metals markets. The US launched multiple strikes against Iran this week, while Tehran retaliated by targeting US bases in neighboring countries, driving oil prices higher and keeping inflationary risks in focus. Investors are increasingly concerned that central banks may keep interest rates elevated for longer or even raise them further to contain inflation. Still, copper prices found some support from mounting supply concerns after a powerful storm struck top producer Chile, causing widespread power outages and significant damage. In addition, Antofagasta reported this week that first-half copper production fell 9.5% to 285,000 tonnes due to lower output at two key mines. BHP also warned that its Chilean production is expected to decline next year, while the IEA flagged tightening sulphuric acid supplies.

Copper futures climbed above $6.3 per pound, hitting over three-week highs as production in Chile declined due to a combination of water shortages, lower ore grades, unplanned maintenance, the transition from oxide to sulfide mining, and labor disputes. Chile’s monthly economic activity index has recorded consecutive declines this year, largely reflecting weaker mining activity and reduced copper output across several major operations. Chile accounts for roughly 50% of global copper exports, with the metal contributing more than 10% of the country’s GDP. Copper prices also benefited from softer-than-expected US inflation data that eased concerns for imminent Federal Reserve interest rate hikes. Meanwhile, traders continued to monitor escalating tensions in the Middle East, with the resulting demand shock offsetting concerns over potential supply disruptions.

Copper futures fell to around $6.16 per pound, giving back some of last week’s gains as escalating tensions in the Middle East kept inflationary pressures and interest-rate hike expectations in focus, clouding the demand outlook for industrial metals. The US carried out its fourth strike in a week against Iran on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship. Tehran declared that the Strait of Hormuz would be closed "until further notice," though the claim was dismissed by the US Central Command. Rising oil prices revived concerns over inflation and tighter monetary policy, with markets expecting the Federal Reserve to raise interest rates at least once before the end of the year. Investors are now awaiting key US inflation data and Fed Chair Kevin Warsh’s appearance before the US Congress this week. Copper, widely regarded as a barometer of global economic growth, remained highly sensitive to changes in the economic and monetary policy outlook.