Copper Edges Higher Amid Ongoing Macro Headwinds

Copper prices rebounded on Tuesday after a sharp decline in the previous session, despite ongoing macroeconomic headwinds. The metal edged up 0.34% to $14,461.50 per metric ton on the London Metal Exchange (LME), while the Shanghai Futures Exchange saw a 0.09% gain to 109,530 yuan ($16,335.08) per ton.

The LME copper price had fallen 1.4% on Monday, reaching its lowest point in over ten days due to weak Chinese industrial profits data and rising oil prices. The strong US dollar also contributed to the decline. Analysts at Galaxy Futures noted that downstream copper users in China have completed their pre-holiday restocking and are now only buying as needed.

Ongoing concerns about Chinese demand, coupled with higher oil prices and a stronger dollar, kept bullish sentiment in check. The Brent crude price remained above $106 per barrel, driven by worries over Middle East supply disruptions. This has strengthened inflation expectations and led markets to price in another Federal Reserve rate increase in October.

The US interest rates have a direct impact on copper demand, as higher rates typically lead to slower economic activity. Other LME metals also saw varying degrees of movement, with aluminium rising 0.43%, zinc gaining 0.26%, and lead adding 0.34%. However, nickel and tin slipped 0.09% each.