Copper Marches Toward Record Highs

Copper futures climbed above $6.25 per pound on Tuesday, moving back toward 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 advanced despite growing expectations that the US Federal Reserve will raise interest rates this year to combat inflation. 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.

Copper futures climbed to around $6.26 per pound on Friday, reversing losses from earlier this week as investor appetite for risk assets improved, led by a rebound in semiconductor and artificial intelligence-related stocks. Market participants also looked past the renewed fighting in the Middle East after reports indicated that the US and Iran will continue peace negotiations aimed at securing a lasting resolution to the conflict. Meanwhile, oil prices retreated from recent highs, helping ease inflation concerns and reduce fears of aggressive interest rate hikes, which improved the outlook for manufacturing activity. Even so, markets continue to expect the Federal Reserve to raise interest rates at least once this year. Copper, often viewed as a barometer of global economic growth, remained sensitive to shifts in the economic and monetary policy outlook.