Copper Rebounds on US-Iran Deal Optimism

Copper futures slipped to around $6.6 per pound, but stayed close to all-time highs as supply-side risks persisted despite a recent easing of the market squeeze. Traders continued to divert shipments toward the US amid elevated premiums and expectations of new tariffs under the Trump administration, with the White House yet to make a final decision on the matter. Copper inventories in warehouses tracked by the London Metal Exchange have fallen by almost half since mid-May following a 42-day streak of declines. Elsewhere, Zijin Mining warned that flooding at the Kamoa-Kakula copper complex in the Democratic Republic of Congo could cut its share of production by as much as 57,000 tons this year, underscoring ongoing risks to global supply. On the demand side, Chinese smelters have faced difficulties securing feedstock, increasing the need for imports.

Copper futures fell toward $6.55 per pound, retreating from recent highs as a sharp build-up in exchange inventories eased concerns over near-term supply tightness. LME-monitored copper inventories stood at 238,575 tons on August 20, about 16% above their February low, while SHFE-monitored stocks jumped 28.4% last week to 89,548 tons. The rise in inventories, along with a sharp narrowing in the LME cash premium over three-month copper, pointed to improved near-term availability and weighed on prices. Meanwhile, Zijin Mining warned that flooding at the Kamoa-Kakula copper complex in the Democratic Republic of Congo could reduce its share of production by as much as 57,000 tons this year, highlighting continued risks to global supply. A weaker US dollar helped limit the decline, while investors await the Jackson Hole meeting and the Federal Reserve Chair’s speech for clues on interest rates.

Copper futures climbed above $6.5 per pound on Friday, recovering losses from earlier in the week as tight physical supply continued to underpin prices. The copper market remains vulnerable after months of outflows, partly due to metal being diverted to the US ahead of anticipated tariffs. Top producer Chile also expects copper output to decline this year as ongoing disruptions continue to weigh on mines and development projects. However, a recent increase in metal deliveries to London Metal Exchange warehouses helped ease a historic supply squeeze. Elsewhere, copper prices were supported by a weaker dollar as skepticism over the US government’s bond buyback plan reduced the greenback’s appeal, boosting demand for metals and other currencies. Meanwhile, investors continued to monitor geopolitical developments as the US prepares sweeping new economic sanctions against Iran, pushing oil prices higher and adding to inflation concerns.