Copper falls as higher oil prices fan fears over inflation, growth

Copper flipped into the red on Tuesday as Iran launchedfresh attacks on U.S. allies in the Gulf region in the third week of the war, pushing up oil prices and fanning fears over growth and inflation. The most-active copper contract on the Shanghai Futures Exchange declined 0.27% to close at 99,340 yuan ($14,422.60) a metric ton, failing to hold above the 100,000 yuan level after rising 0.93% earlier this session. The benchmark three-month copper, meanwhile, dropped 0.77% to $12,757 a tonas of 0806 GMT, after pulling up 0.72%. The U.S. and Israeli war against Iran saw no sign of an end, as the Strait of Hormuz remained effectively shut and U.S. allies pushed back President Donald Trump's call to send warships to escort tankers through the Strait. Oil remained strong, with Brent futures holding above $100 a barrel, stoking inflation and growth fears. Global central banks are in focus. The Australian central bank on Tuesday raised rates for a second straight month to a 10-month high, warning about inflation risks from the Middle East war. The Bank of Japan is set to keep the interest rate steady while the surging oil prices added to the country's mounting inflationary pressure. In the U.S., the Federal Reserve is expected to keep rates steady on Wednesday, while investors price in fewer rate cuts for 2026. The U.S. dollar strengthened after weakening on Monday, turning greenback-denominated commodities more expensive for traders using other currencies. Aluminium also gave up earlier gains. The Shanghai aluminium dropped 0.40% to close at 24,990 yuan a ton, after rising as much as 0.64%. The London benchmark dipped 0.04% to $3,394 a ton, after a 0.90% rise. Aluminium's earlier gains came as Guinea, the world's top bauxite producer and source of about 40% of global supply, is considering introducing export quotas for mining firms as earlier as this month, Reuters reported on Monday. The conflict in the Middle East has already hit output, with Aluminium Bahrain initiating a phased shutdown of 19% of its capacity and Qatalum operating at roughly 60%. Elsewhere on the SHFE, zinc lost 1.31%, lead gained 1.44%, nickel dropped 0.33%% and tin climbed 0.63%. Among other LME metals, zinc dropped 0.54%, lead rose 0.73%, nickel lost 1.03% and tin slid 3.54%.