METALS-Copper falls as Middle East conflict overshadows tariff support

- Copper slipped on Thursday as concerns over a high-for-longer U.S. interest rate and a rash of new attacks in the Middle East weighed on hopes for a quick resolution between Washington and Tehran.

Benchmark three-month copper CMCU3 on the London Metal Exchange dipped 0.18% to $13,800 a metric ton by 0330 GMT.

The most-active copper contract SCfc1 on the Shanghai Futures Exchange dropped 1.11% to 105,680 yuan ($15,590.93) a ton.

Copper was still somewhat supported amid U.S. tariff uncertainty, as investors awaited a recommendation from the U.S. Department of Commerce on possible tariffs on imports of refined copper, due by the end of the month.

Renewed attacks in the Persian Gulf cast doubt on negotiations between Tehran and Washington on Wednesday, even as an agreement between Israel and Lebanon to implement a ceasefire boosted hopes for a deal on Thursday morning.

Uncertainty in the Middle East continues to act as a headwind, with copper’s near-term price direction “likely to remain sensitive to macro risks”, analysts at ING said in a note on Thursday.

Adding to the pressure were concerns that rising inflation risks and stronger-than-expected job data would cause the U.S. Federal Reserve to leave interest rates unchanged for longer. Interest-rate futures imply traders are pricing in about a 75% chance of a quarter-point Fed rate increase by year-end, taking the policy rate to 3.75%-4.00%.

Base metal prices were down across the board on the LME and the SHFE.

On the LME, aluminium CMAL3 dipped 0.08%, zinc CMZN3 dropped 0.44%, lead CMPB3 declined 0.52%, nickel CMNI3 tumbled 0.69% and tin CMSN3 slipped 0.54%.

Among other metals on SHFE, aluminium SAFcv1 tumbled 1.03%, zinc SZNcv13 lost 1.17%, lead SPBcv1 declined 1.23%, nickel SNIcv1 slid 2.55%, and tin SSNcv1 dropped 0.86%.

($1 = 6.7783 Chinese yuan renminbi)