Copper Retreats on Middle East Uncertainties

Copper futures slipped back toward $6 per pound on Thursday after reaching near two-month highs in the prior session, as stalled US-Iran peace efforts and continued disruption in the Strait of Hormuz kept energy prices elevated and inflation risks in focus. Tehran continues to maintain control of the strategic waterway and has reportedly fired on commercial vessels this week, while the US blockade of Iranian ports remains in place, sustaining pressure on the Islamic Republic. Copper and other industrial metals have faced headwinds from inflation concerns that could prompt tighter monetary policy, alongside growth risks that may soften global industrial demand. Still, downside pressure has been partially cushioned by restocking activity in China ahead of the Labor Day holiday from May 1 to 5. Official data also showed Chinese smelters produced a record 1.33 million tons of refined copper in March.

Copper futures climbed back above $6 per pound on Wednesday, rebounding from the previous session’s losses as restocking activity in China picked up ahead of the Labor Day holiday from May 1 to 5. Official data also showed Chinese smelters produced a record volume of refined copper in March, as elevated prices for byproduct sulfuric acid boosted output and improved industry margins. Production rose to 1.33 million tons, the highest level in data dating back to 1990. However, copper output is expected to ease in April and the following month due to seasonal maintenance at smelters, with the bulk of the impact likely to be felt in May. Elsewhere, Australian mining giant Rio Tinto reported a 9% increase in first-quarter copper production, driven by ramped-up operations at the Oyu Tolgoi mine in Mongolia.

Copper futures slipped below $6 per pound on Tuesday, remaining under pressure as investors stayed cautious ahead of further US-Iran peace negotiations. Both sides are expected to send delegations to Islamabad for a second round of talks before the current ceasefire expires, although President Donald Trump said he is unlikely to extend the truce and that the Strait of Hormuz will remain blocked until a deal is finalized. Continued disruption in the key shipping route has intensified the energy shock, lifting inflation and growth risks, with spillovers into manufacturing and broader industrial metal demand. Despite near-term weakness, copper remains underpinned by longer-term structural support from global electrification trends, artificial intelligence expansion, and steady demand from power grid upgrades and construction activity. On the supply side, output remains constrained by mining disruptions, persistent underinvestment, and extended timelines for new project development.