Copper rebounds, shrugs off Middle East conflict escalation

Copper rebounded on Thursday, as the market looked past an escalation in Gulf hostilities and the dollar steadied after its recent surge. Benchmark three-month copper on the London Metal Exchange was up 1.62% at $13,379 a metric ton by 0700 GMT. The most-traded copper contract on the Shanghai Futures Exchange added 0.16% to 103,160 yuan ($15,182.65) a ton, paring losses from a drop of as much as 1.32% earlier in the session. Though the copper market still watches Middle East conflict developments, investors "have tended to price in an expectation that any escalations will be short-lived and a resolution will be found," said Craig Lang, principal analyst at CRU. Copperfell on Wednesday on demand concerns after U.S. President Donald Trump said the memorandum of understanding signed with Iran to end the Gulf conflict was "over" and the two countries traded attacks. "The resurgence of the Middle East conflict has led to short-term trading based on inflation and interest rate logic," Chinese broker Everbright Futures said in a note. Inflation and interest rates remain front of mind for industrial metals. Higher input costs, including from energy, have squeezed manufacturers, casting a shadow over industrial metal prospects. Chinese producer inflation neared a four-year high in June, data released on Thursday showed. Elsewhere, aluminium was firm. Its price on the LME was up 0.62%, while on the SHFE the metal edged down 0.04%. Aluminium has been supported by waning inventories and concerns about a disruption to the return of supply from the Middle East. Among other LME metals, zinc rose 1.85%, lead gained 0.61%, nickel gained 1.21% and tin rose 2.57%. Elsewhere on SHFE, down only 0.04%, zinc added 0.4%, lead added 0.47%, nickel gained 1.22% and tin gained 0.99%.