Copper falls to three-week low as inventories rise and markets focus on oil

Copper prices fell to their lowest levels in more than three weeks on Tuesday, as inventories on the London Metal Exchange increased, while concerns over economic growth intensified due to higher oil prices and a stronger US dollar.

Benchmark copper on the London Metal Exchange rose 0.1% to $14,021 per metric ton by 10:06 GMT, as buyers stepped in to take advantage of lower prices, according to traders. Prices had earlier fallen to $13,926, the lowest level since August 20.

Copper inventories in LME-registered warehouses have risen by around 20% since mid-August to 242,900 metric tons, driven by premiums for nearby contracts over longer-dated futures.

Traders expect more copper that was previously sold at higher prices to arrive at LME warehouses in the coming days. However, they added that deliveries are likely to fall rapidly after premiums shifted to discounts last week.

Copper prices across different maturities began falling last week after sources told Reuters that US President Donald Trump had yet to make a decision on imposing tariffs on copper imports.

The prospect of tariffs on US copper imports pushed copper prices on the Comex exchange above those on the LME. Over the past 18 months, traders have shipped copper to the United States, driving Comex inventories to record levels.

“Nothing good can come from disrupting markets essentially through government policy. My gut feeling is that he will impose them at some point, otherwise we are going to see the biggest trade reversal in the history of copper,” said Tom Price, an analyst at Panmure Liberum.

Analysts said concerns over oil supplies and prices, which have reached around $107 a barrel compared with roughly $87 at the end of August, are likely to weigh on economic growth, industrial activity and demand for metals.

Industrial metals broadly came under pressure from the stronger US currency, which makes dollar-denominated commodities more expensive for holders of other currencies.

Aluminum fell 0.1% to $3,240 a ton, while zinc dropped 0.7% to $3,766 and lead declined 0.3% to $1,876. Tin was little changed at $51,850, while nickel fell 0.9% to $16,190.