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Base metals slide as rate worries and oil shocks fuel volatility
LME copper has traded sideways in a $13,000 to $14,000 per metric ton band after earlier testing a May peak near $14,000, while leveraged investors sell to raise cash as central banks keep rates higher for longer.
Metals markets are caught in a tug of war, with structural supply deficits and an AI driven expansion of data center infrastructure supporting prices, but global growth reassessments, high energy prices, and the risk of interest rates staying higher for longer weighing on the bullish outlook, according to OilPrice.
Base metals have seen sharp swings this year, with the London Metal Exchange index, LMEX, reaching an all time high in early June before falling to a three month low a couple of weeks later after the collapse of a US and Iran ceasefire deal pushed up oil prices and revived global inflation fears.
OilPrice says leveraged investors have been selling assets to raise cash as they expect central banks to keep policy rates higher for longer, while metal specific tariff uncertainty continues to drive volatility and inventory dislocations.
Commodity analysts at Standard Chartered cited macro factors likely to steer base metals, including shifts in risk appetite, Fed rate policy, US dollar moves, and China economic activity, and the outlet notes that LME copper has remained range bound over the past two months after testing a May all time high. Standard Chartered also forecast copper would stay elevated in the second half, with the outlook linked to expectations around US copper tariffs.
Latest closeCopper $6.505 ▼0.1%