Rate Hike Expectations Fade as Copper Leads Industrial Metals Higher
Claire Weston
Weak U.S. jobs data cooled rate-hike bets and sent the dollar lower for a second day, lifting LME copper as much as 1% intraday — but sluggish demand from traditional industries still caps the upside.
Why did copper suddenly bounce?
The core driver is a weaker dollar: U.S. employment data missed expectations, markets saw less reason for rate hikes, and the dollar fell for a second straight session.
This means → a cheaper dollar makes dollar-priced copper more affordable for global buyers, drawing them back in.
As of 10:35 Shanghai time, LME copper rose 0.7% to $13,413 per tonne; nickel jumped 1.8%; aluminium, zinc and tin all moved higher.
Why is aluminium lagging behind?
Aluminium has already fallen back to pre-war levels — the steepest decline among industrial metals.
The reason: Middle East supply expectations are normalising. After the U.S. and Iran reached an interim peace deal last month, more vessels can transit the Strait of Hormuz — the chokepoint linking the Persian Gulf to open sea — and regional aluminium supply is recovering.
Emirates Global Aluminium (EGA) also announced it will accelerate capacity restarts at war-affected plants. In plain terms = the "war premium" baked into aluminium prices is being squeezed out.
How does falling oil indirectly help industrial metals?
Brent crude traded roughly flat this week, having already erased its war premium.
Lower oil → lower inflation expectations → more room for the Fed to stay accommodative → indirect support for industrial-metal demand outlooks.
This reflects a four-link transmission chain: energy prices — inflation — interest rates — industrial demand, each step feeding the next.
Can the rebound last? What is the key test?
Li Xuezhi, head of research at Chaos Ternary Futures, noted: "The dollar's pullback is positive for copper, but persistent weakness in traditional industries will keep capping the upside."
This means → the current bounce is driven mainly by FX moves and sentiment, not by an actual pick-up in physical demand.
The verification point ahead is clear: whether traditional-industry demand stabilises — if downstream copper consumers in construction, power grids and manufacturing show no recovery signal, this rebound is likely short-lived.
Content is for reference only, not financial advice.