Copper has seen considerable fluctuations, impacting industrial metals. On June 29, three-month futures for copper dropped towards $13,300 a ton due to the Federal Reserve's hawkish stance and a rising US dollar, stemming from expectations of interest-rate hikes to combat US inflation. However, by July 3, copper rebounded, climbing as much as 1% on the London Metal Exchange, as weak US jobs data curbed bets on higher borrowing costs, easing pressure on industrial demand.
Aluminum also faced significant challenges, recording its steepest monthly loss since 2008 in June. This decline of over 15% was initially attributed to an interim US-Iran peace deal that spurred optimism about the resumption of Middle Eastern shipments through the Strait of Hormuz, unwinding an Iran war-induced rally. However, renewed US-Iran hostilities in July further intensified concerns over global economic growth, leading to additional price dips for aluminum and other base metals.
The broader base metals market, including copper, aluminum, nickel, zinc, tin, and lead, experienced a sharp selloff in July following renewed US-Iran hostilities. This geopolitical flare-up heightened concerns about weakening global economic growth, making dollar-denominated metals more expensive due to a stronger US dollar, which solidified as a safe-haven asset. Rising crude oil prices, surging approximately 5% to a two-week high, also fueled inflation concerns, suggesting central banks might maintain higher interest rates for longer, further pressuring non-yielding assets like metals. Copper and aluminum are expected to see the sharpest price declines due to their exposure to the construction and manufacturing sectors, while nickel and zinc face weaker demand from the stainless steel and galvanizing industries. Gold also declined below $4,000 an ounce, hitting $3,943 in late June, influenced by these factors.
