Copper Rises on Risk-On Mood

Copper futures steadied near $6.3 per pound on Tuesday after facing pressure in recent sessions, as solid trade data from top consumer China reinforced the demand outlook. Chinese exports jumped 19.4% to a record $376.8 billion in May, well above expectations, driven by strong demand for AI technology and renewable energy products. Copper also drew support from easing geopolitical tensions after Iran and Israel agreed to halt attacks against each other, reducing concerns that higher oil prices could fuel inflation and lead to tighter monetary policy that would weigh on global growth and metals demand. Meanwhile, Jefferies expects copper prices to remain stronger for longer than previously anticipated, citing an average annual supply deficit of 491,000 tons through 2030 and a delayed recovery at the Grasberg mine.

Copper futures in the US were above $6.3 per pound, halting the slide from the record high of $6.6 touched on June 2nd as supply risks from the war in the Middle East toggled against the macroeconomic headwinds stemmed by the conflict. The first exchange of strikes between Iran and Israel since their fragile ceasefire dimmed expectations of a broader deal between Tehran and the US. The prolonged conflict has halted exports of sulfur and sulfuric acid from key GCC producers, which in turn have driven China to halt their exports of the commodities and triggered shortages in major copper producer Chile. Tight supply of sulfuric acid limits copper refining capacity, challenging Codelco's ongoing campaign to reduce operating costs. Meanwhile, macroeconomic pressure on manufacturers due to the war limited the increase in prices. These were also capped by expectations of a hawkish Federal Reserve following the release of robust jobs numbers in the US, strengthening the dollar.

Copper futures remained below $6.3 per pound on Monday after falling roughly 6% over the previous three sessions, pressured by robust US jobs data that strengthened expectations for a Federal Reserve interest rate increase later this year. Escalating tensions in the Middle East also added to market concerns after Iran launched missiles toward Israel, driving energy prices higher and raising fears of persistent inflation. Higher inflation and tighter monetary policy could weigh on economic growth and curb demand for industrial metals such as copper. Meanwhile, the Trump administration's June deadline to decide on potential new US import tariffs has encouraged additional copper shipments into the United States, tightening supply in other regions. On the demand side, data showed copper inventories in warehouses monitored by the Shanghai Futures Exchange fell to their lowest level of the year last week, pointing to resilient consumption and strong buying activity in China.