Copper falls as escalating Mideast conflict fuels slowdown concerns

Copper fell on Thursday, as an escalation in the Middle East conflict pushed oil prices higher and raised concerns about global economic growth. Benchmark three-month copper on the London Metal Exchange fell 0.6% to $13,435 a metric ton by 0700 GMT. Earlier in the day, it had reached a new three-week low of $13,378 a ton. The most-traded copper contract on the Shanghai Futures Exchange tumbled 1.26% to 103,160 yuan ($15,222.75) a ton. SHFE prices had touched 102,640 yuan a ton earlier in the day, the lowest level since May 8. The US launched additional strikes on Iran overnight, and Iran said the Strait of Hormuz would be closed until further notice, though the U.S. Central Command denied the strait was closed. Oil prices rallied, with Brent increasing 0.49%. High energy prices squeeze manufacturing, a major source of copper demand. Aluminium prices edged up by 0.53% on the LME and 0.5% on the SHFE. Production of the metal is energy-intensive, and the Middle East houses 9% of global smelting capacity for aluminium. Physical aluminium stocks are low. Total aluminium stocks in LME-registered warehouses remained at a multi-year low, data released on Wednesday showed. Elsewhere, data showed that U.S. inflation was well above the Federal Reserve's 2% target in May, though below investors' worst fears. Persistently high inflation has dampened the macroeconomic outlook and raised concerns about higher-for-longer interest rates. Fed fund futures are now pricing in an implied 51.6% probability that the Fed will raise rates at its two-day meeting in October. Among other LME metals, zinc lost 1.09%, lead added 0.23%, nickel rose 0.35% and tin gained 0.57%. Elsewhere on the SHFE, zinc dropped 2.44%, lead gained 0.65%, nickel lost 1.04% and tin ticked 0.07% higher.