Copper Prices Fall Amid Geopolitical Tensions and Strengthening Dollar

Copper prices rose early in the week due to de-escalation signals from high-level US-Iran talks and Saudi Arabia's resumption of exports. However, tensions flared again, and concerns about geopolitical conflict pushing up oil prices and inflation renewed.

The US S&P Global Manufacturing PMI flash reading for September climbed to 57, a near five-year high, further reinforcing rate hike expectations. This strengthened the US dollar and Treasury yields, causing copper prices to retreat from highs.

LME copper peaked at $14,799/mt and the most-traded SHFE copper contract rose to 111,840 yuan/mt during the week. However, as of September 24, LME copper settled at $14,578/mt and the most-traded SHFE copper contract settled at 110,810 yuan/mt.

Both COMEX and LME inventories edged up this week, with congestion emerging at the Port of New Orleans and a regional mismatch in global copper cathode supply still unresolved. Chinese SMM copper inventories across major domestic regions fell by 16,500 mt WoW to 72,600 mt, remaining at a low level for recent years.

Looking ahead to next week, market attention will turn to President Xi Jinping's visit to the US and the outcome of talks on China-US trade, tariffs, and other issues. If both sides send de-escalation signals, reduced trade uncertainty could improve market risk appetite and support copper prices.