Copper futures declined on the London Metal Exchange on Monday, falling as much as 0.6 percent to $14,193 a ton by 10:05 am Singapore time—marking the first weekly loss since June. The sell-off came as traders sharply increased bets on a Federal Reserve rate hike following Friday's hotter-than-expected U.S. inflation data.
The structural shift in the physical market was evident in the spot premium over three-month futures, which compressed to $4.50 a ton. That collapse signals an abrupt easing of supply tightness that had characterized the market in prior weeks—a critical reversal for a commodity that had rallied to $14,500 per ton the week prior on tariff-hedging demand and supply concerns.
The tariff narrative, which had driven preemptive shipments to the U.S. in anticipation of domestic price spikes, appears to have lost momentum. Demand strength from data center wiring and renewable energy projects also receded as risk appetite deteriorated across commodities.
The broader pressure stemmed from a strengthening dollar and a general rotation away from non-yielding assets. Tighter monetary policy has a direct inverse relationship to commodities lacking a yield cushion.
Analysts at Sucden Financial Ltd. noted the market remains choppy at current levels, with direction contingent on either a return of dip-buying interest or a fresh macro or fundamental catalyst.
Other major contracts followed copper lower: zinc fell 0.7 percent, iron ore dropped 0.4 percent to $97 a ton for its fourth consecutive session, while aluminum remained flat.
