Copper Prices Fall for Two Consecutive Days as Rising Oil Prices Heighten Inflation Concerns
nashnova research
LME three-month copper fell below $14,200 to $14,151 per tonne, down 0.9%; the U.S.–Iran conflict is pushing oil higher and markets are pricing in more rate hikes, pressuring industrial metals across the board.
Copper just hit a record — why is it falling now?
LME three-month copper settled at $14,151/t on September 2, down 0.9% for a second straight day.
Last week copper posted an all-time closing high; this two-day pullback marks the first real pause in the rally.
This means → the market is not rejecting copper's fundamentals — it is reacting to a new macro signal: inflation expectations driven by oil.
Why does rising oil drag copper down?
After the U.S. struck Iranian targets, Iran retaliated against Jordan, Bahrain, and Kuwait; the escalation pushed crude higher for a third straight day.
Prospects for reopening the Strait of Hormuz — the chokepoint for roughly a fifth of global oil shipments — grew more uncertain.
In plain terms = oil up → inflation expectations rise → markets bet on rate hikes → hikes slow the economy → industrial-demand outlook shrinks. Copper, the most macro-sensitive industrial metal, takes the first hit.
Where does the Fed stand?
Fed Chair Kevin Warsh delivered a hawkish speech at Jackson Hole last Friday; combined with the U.S.–Iran escalation, markets ramped up bets on further tightening.
Guangzhou Futures wrote in a research note: "Rising oil prices are reinforcing inflation expectations, putting copper under pressure. Fundamentals remain sound, but macro uncertainty will keep capping the upside."
This means → the supply side has no bad news; the entire problem is on the demand side — if rates keep climbing, industrial activity slows and copper consumption falls.
Are other metals falling too?
Industrial metals fell broadly: zinc dropped 1.3% to $3,873/t, one day after hitting a four-year closing high; nickel, aluminium, tin, and lead all declined.
Copper still posted a nearly 4% gain for the full month of August, supported by tight supply.
This reflects a market caught between "solid fundamentals vs. macro headwinds" — the short-term path depends on whether oil prices and rate-hike expectations cool.
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