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Copper remains firm as US-Iran conflict weighs on sentiment

The copper prices held steady on Monday, as the dollar eased. However, gains were limited as the 'fighting' between the U.S.A. and Iran intensified and oil prices rose, reinforcing fears of inflation and growth.

At 1601 GMT, the benchmark copper price on 'the?London Metal Exchange' was up 0.3% to $13,528 per metric tonne.

The lower dollar makes metals priced in dollars cheaper for holders of currencies other than the U.S. dollar, which could increase demand.

The price of oil has risen after renewed military attacks between the United States of America and Iran re-ignited concerns over energy shipments via the Strait of Hormuz.

The focus was also on the falling copper inventories. Since the end of last month, copper stocks in LME approved warehouses dropped by more than 20 percent. They now stand at a four-month-low of 305 200 tons.

Metal earmarked for shipment at almost 43% or cancelled warrants indicate that another?130.525 tonnes is expected to leave the LME.

Sources in the industry say that a large amount of this copper is heading to the United States, where President Donald Trump may impose tariffs on metal used for construction and power industries.

Since Trump's order to launch a national-security probe in February of last year, traders and producers have shipped metals into the United States.

Since then, copper stocks in warehouses registered at Comex have increased by nearly 600%.

The Shanghai Futures Exchange monitors a number of warehouses where copper stocks have dropped by?nearly 80 percent since mid-March.

Alastair Munro, senior metals strategist with broker Marex, explained that rapidly falling stocks create a higher floor price.

Kevin Warsh, the Federal Reserve Chairman and U.S. Inflation data can provide clues about the direction of the dollar.

Aluminium increased 0.7% to $3.163.5, while zinc fell 1.5%, lead dropped 1.5%, and nickel added 0.4%.

(source: Reuters)