Copper Slumps as Higher US Interest Rates Gain Momentum

Copper prices have dropped due to renewed expectations of higher interest rates in the US. Fresh data on business activity has pushed traders towards the 'higher-for-longer' rate bets, which can weigh on globally priced commodities by lifting the value of the US dollar.

The Yangshan import premium, a measure of China's physical demand for copper, remains at $117 a ton. This indicates that Chinese buyers are still paying up for delivered supply, despite higher financing costs.

Markets are pricing a 72% chance of a Fed hike at its October meeting, up from 49% a week earlier. The divergence between 'paper' and physical markets may provide valuable insight into the copper market's future direction.