Copper is poised for a weekly gain, with benchmark three-month copper on the London Metal Exchange (LME) rising 0.29% to $13,528 per metric ton by 0300 GMT on Friday, and a 1.2% increase over the week. The Shanghai Futures Exchange's most traded copper contract also saw a 1.61% rise to 103,950 yuan (approximately $15,334.80). This rebound comes despite intensified US-Iran hostilities earlier in the week, as investors increasingly focus on the metal's long-term demand outlook.
Analysts and market participants are emphasizing copper's crucial role in wiring and renewable energy infrastructure, which stands to benefit significantly from the escalating power demands of new artificial intelligence (AI) data centers. This optimism for a long-term demand boost has helped copper prices recover from earlier dips, even as related risk assets like semiconductor stocks also rallied. The weakened dollar, on track for its third consecutive daily drop, further supported copper prices by making the commodity cheaper for buyers holding other currencies.
The market initially reacted to the US strikes on Iran with concerns about inflation and potentially higher interest rates. Chinese producer inflation reached a four-year peak in June, and minutes from the US Federal Reserve's June meeting showed increasing concern among policymakers about inflation. However, experts like John Williams, president of the New York Federal Reserve, downplayed the inflationary impact of the latest Middle East conflict, helping to ease investor anxieties. Craig Lang, principal analyst at CRU, noted that investors are tending to price in an expectation that any escalated tensions will be brief and a solution will be found.
Other industrial metals also saw gains. Aluminum prices gained 0.55% on the LME and 0.67% on the SHFE, supported by dwindling inventories and fears of supply disruptions from the Middle East, a region accounting for 9% of global aluminum smelting capacity. Zinc rose 0.06% on the LME, after rallying over 3% on Friday due to reports of a fire at a South Korean smelter. Lead added 0.18%, nickel gained 0.29%, and tin ticked up by 0.1% on the LME, indicating a broader positive sentiment across the industrial metals sector.
