Copper Slips as Rate Hike Bets Cloud Demand Outlook

Copper prices slipped on Tuesday as expectations of a potential US Federal Reserve interest rate hike weighed on the demand outlook, despite easing geopolitical tensions after a pause in US strikes on Iran helped push crude oil prices lower.

 

Benchmark three-month copper on the London Metal Exchange (LME) fell 0.5% to $13,664 per metric ton, while the most-active Shanghai Futures Exchange (SHFE) copper contract edged 0.14% lower to 104,800 yuan ($15,484.86) per ton.

 

Market participants are awaiting the outcome of the US Federal Reserve's policy meeting on Wednesday. According to the CME FedWatch Tool, there is a 62% probability that the Fed will keep interest rates unchanged, while 38% expect at least a 25-basis-point rate hike, up from 16% a week ago.

 

Analysts at Galaxy Futures said easing US-Iran tensions had reduced oil prices, but growing expectations of further Fed tightening could curb economic activity and weaken demand for industrial metals.

 

Copper has been supported by long-term demand linked to artificial intelligence infrastructure, electrification and electric vehicles. However, cautious investor sentiment and weakness in global equity markets, particularly among technology stocks, limited gains.

 

Among other base metals, LME aluminium fell 0.35%, zinc declined 0.43%, nickel eased 0.16%, tin dropped 1.71%, while lead rose 0.21%. On the SHFE, zinc lost 0.5%, nickel fell 0.77%, tin slipped 1.5%, and lead gained 0.35%.