Copper slips after 10-week rally as Fed rate-hike bets rise

London copper prices slipped on Monday following a 10-week rally, as traders grew more optimistic about a Federal Reserve rate hike following stronger-than-expected jobs data. The three-month copper price on the London Metal Exchange fell 0.27% to $14,377 per metric ton, while the dominant copper contract on the Shanghai Futures Exchange remained unchanged at 109,110 yuan ($16,257.41) per ton.

US nonfarm payrolls data for August showed an increase of 162,000 jobs, surpassing economists' predictions of a 56,000 job gain. The unemployment rate remained unchanged. These figures fueled expectations of a September Federal Reserve rate increase, although the US dollar found it challenging to build on its Friday gains in Asian trading sessions.

Analysts at Chinese broker Galaxy Futures noted that copper prices have been volatile due to mixed signals regarding Federal Reserve rate hikes and the persistent uncertainty surrounding potential LME short squeezes. The COMEX-LME price gap has narrowed to just above $300 per ton, and the proportion of cancelled LME warrants has decreased. Nonetheless, persistent demand for copper in the US due to potential import tariffs continues to deplete inventories in other regions.

Record-high US copper imports in July contributed to the decline. Warehouse inventories monitored by the Shanghai Futures Exchange dropped by 13% to 63,000 tons last week, the lowest level since January 2024. LME copper stocks also decreased by 475 tons by Thursday. Alumina, nickel, zinc, tin, and lead all experienced slight declines or negligible changes on both the London Metal Exchange and the Shanghai Futures Exchange.