Copper prices are experiencing a decline, following a broader selloff in metals. This downturn is largely attributed to an escalation in US-Iran hostilities, which has sparked a widespread bearish sentiment across commodities. While gold fell 2.1% to below $4,000 an ounce and silver dropped almost 4%, damage to copper prices was somewhat mitigated by significant supply risks stemming from a powerful Category 5 atmospheric river currently sweeping across Chile, a major copper producer.
Despite the immediate geopolitical and market pressures, the decline in copper prices appears to be more limited compared to precious metals. Copper for September delivery settled little changed at $6.342 per pound ($13,980 a tonne) on the Comex, holding near three-week highs, before sliding 1.1% to $6.27 a pound in evening trade. The current price is about 6% below its all-time high of above $6.60 a pound set in early June. In London, three-month copper ended the session at $13,585 a tonne, having been up nearly 8% year-to-date.
The selloff also reflects investor skepticism towards AI assumptions, leading to a broader tech stock downturn. Copper, which has recently been trading like an AI stock due to its crucial role in data centers and power grids, is feeling the impact. This comes after an earlier period where copper had climbed, with some analysts noting its movement in sync with tech giants like Nvidia Corp. and ASML Holding NV. However, the current environment has seen bellwether industrial metal copper caught in the tech sector's retreat.
Adding to supply concerns, Antofagasta reported a 9.5% drop in first-half copper output to 285,000 tonnes, and BHP has flagged declining Chilean output for next year. The IEA also warned that sulphuric acid supply constraints have worsened the near-term outlook for the copper market. Chile's government even cut its 2026 economic growth forecast to 1.8% due to Middle East tensions, although it raised its 2026 copper price assumption to $5.90 per pound from $5.46.
Major copper mining companies saw their equities fall harder than the metal itself. Freeport-McMoRan (NYSE: FCX) fell 4%, Ivanhoe Mines (TSX: IVN) lost 4.9%, Antofagasta (LSE: ANTO) gave up 4.1%, and Southern Copper (NYSE: SCCO) shed 3.2%. BHP (ASX: BHP) slipped 2.3% on the day of its full-year results, indicating that the market is punishing copper-related stocks more severely than the commodity itself, reflecting heightened uncertainty and risk aversion.
