Copper Eases After 10-Week Rally as Fed Rate Hike Expectations Rise

Copper prices edged lower on Monday after recording a 10th straight weekly gain, as stronger-than-expected US employment data increased expectations of a Federal Reserve interest rate hike in September.

 

Three-month copper on the London Metal Exchange (LME) declined 0.27% to $14,377 per metric ton by 0334 GMT, while the most-active copper contract on the Shanghai Futures Exchange (SHFE) was unchanged at 109,110 yuan ($16,257.41) per ton.

 

US nonfarm payrolls rose by 162,000 in August, significantly exceeding economists’ forecast of 56,000, while the unemployment rate remained unchanged. The data strengthened expectations for a September Fed rate increase, although the US dollar struggled to extend its recent gains in Asian trading.

 

Analysts at Chinese brokerage Galaxy Futures said copper remained volatile amid shifting expectations for US interest rates.

 

Concerns about another LME short squeeze have eased as the price gap between COMEX and LME copper narrowed to slightly above $300 per ton. However, continued shipments of copper into the US could tighten supplies elsewhere and create delivery challenges for short-position holders.

 

Copper inventories have also come under pressure as large volumes were moved to the US ahead of potential import tariffs. US copper imports reached a record high in July, while SHFE-monitored warehouse stocks fell 13% last week to 63,000 tons, their lowest level since January 2024.

 

LME copper inventories also declined by 475 tons as of Thursday.

 

Among other LME metals, aluminium fell 0.03%, nickel declined 0.36%, while zinc and tin each gained 0.06% and lead rose 0.29%.