Copper ticks down on macro risks, continued Middle East uncertainty

Copper edged down on Thursday amid fears of higher-for-longer U.S. interest rates and proposed new U.S. tariffs, while progress in negotiations between Washington and Tehran remained unclear. Benchmark three-month copper on the London Metal Exchange dipped 0.6% to $13,742.5 a metric ton by 0701 GMT. The most-active copper contract declined by 1.47% to 105,090 yuan ($15,516.94) a ton. Copper is widely considered a bellwether of the global economy's health. Stubbornly high U.S. inflation and stronger-than-expected jobs data raised concerns that the U.S. Federal Reserve would keep interest rates unchanged for longer. Interest-rate futures imply traders are pricing in about a 75% chance of a quarter-point Fed rate increase by year-end, taking the policy rate to 3.75%-4.00%. Tariff threats re-emerged this week, after the U.S. Trade Representative's Office proposed new duties of between 10% and 12.5% on 60 countries after determining they had failed to curb trade in goods made with forced labour. The proposed duties would grant wide-ranging exemptions, including for imports already subject to Section 232 national security tariffs like steel, aluminium and copper products, and for other specialty metals. Uncertainty around the Middle East continues to act as a headwind, with copper's near-term price direction "likely to remain sensitive to macro risks," analysts at ING said in a note on Thursday. A Thursday morning agreement between Israel and Lebanon boosted hopes for a deal and brought some relief to oil prices. A day earlier, a rash of strikes curbed metal market risk appetite, easing copper off its two-week high. Nonetheless, copper was still somewhat supported amid U.S. tariff uncertainty, which has been a big driver of copper price firmness since the start of April. Investors are awaiting a recommendation from the U.S. Department of Commerce on possible tariffs on imports of refined copper, due by the end of the month. "Pullbacks are likely to attract renewed buying interest from participants seeking to capture the remaining incentive to move metal into the U.S.," analysts from Sucden Financial said in a note. On the LME, aluminium dipped 0.39% to $3,689 a ton, nickel fell 1.44% to $18,600 a ton, tin plunged 3.25% to $55,540 a ton, zinc tumbled 1.02% to $3,573.5 a ton and lead decreased 0.77% to $2,008 a ton. Among SHFE metals, aluminium fell 1.32% to 24,260 yuan a ton, nickel decreased 3.9% to 138,120 yuan a ton, tin dropped 3.92% to 428,910 yuan a ton, zinc fell 1.47% to 24,750 yuan a ton and lead fell 1.36% to 16,375 yuan a ton.