(June 10): Metals from aluminium to zinc dropped after tensions in the Middle East escalated and expectations for US rate hikes weighed on the demand outlook for commodities.
Sentiment soured as stocks dropped after US forces struck Iran. The prolonged war has stoked inflation and raised the prospect of higher interest rates that could slow global growth and demand for metals.
Metals trimmed losses partially after US data for May showed core consumer prices rising less than expected, although annual headline inflation still accelerated to 4.2%, the fastest pace in more than three years. Copper was trading 0.1% lower after the report, while aluminium, nickel and zinc were all more than 1% lower.
The metals market is focusing on tighter global liquidity following robust US employment data last week, which is bearish for risk assets from gold and silver to industrial materials, said Li Xuezhi, research head at Chaos Ternary Futures Co.
Long-term demand prospects are still intact, however, driven by increased spending on technology. The latest headline is that China is preparing to spend around two trillion yuan over the next five years on building data centres. Global spending on data infrastructure has become a key pillar of the bullish outlook for copper and other metals in recent months.
The idea of building a nationwide computing network was laid out in China’s five-year plan earlier in 2026, and the investment is in line with expectations and isn’t affecting prices in the short term, said Li.
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Aluminium on the London Metal Exchange fell as much as 2.2% to US$3,468 a tonne, the lowest since late April, and was trading at US$3,507 a tonne as of 2.44pm local time. Copper declined to US$13,597.00 a tonne, while nickel dropped 1.5%.
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