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Copper prices fall on LME stock builds and weak China data
The price of copper fell on 'Tuesday. It eased from the six-month high reached in 'the previous session. London Metal Exchange inventories rose for a second day, and the market digested disappointing data derived from China, its largest consumer. As of 0900 GMT, the benchmark three-month LME copper was down by 0.8% to $14,036 per metric tonne. After the LME stock data was released, it briefly fell below $14,000. It lost as much as 1,1% to $13,997. Data showed that another '17,450 tonnes of copper entered LME warehouses Monday. This included 7,250 tons from the U.S., and 3,000 in Hong Kong. There were also 2,575 tones of reverse cancellations. This increase comes after a smaller build on Friday, which took total LME Copper stocks to a record high. After a long draw, the total weight of coal has risen to 223,550 tonnes. This is still less than half what it was in May. The deliveries were made as the LME cash copper contract reached a new record on Monday, and traders tried to capture the steep premium it offered over the three-month future. . Last traded at $362 per ton. This is down from $545 a day earlier, but it's still a steep spread. China's factory production grew by 4.5% from a year ago in July, falling short of expectations. Fixed-asset investments in?the nation, including investment in key copper-consuming industries like real estate and infrastructure, declined?6.7% during the first seven-month period of 2026. "Weaker-than-expected economic data in China weighed on sentiment across the base metals ?sector," Daniel Hynes, senior commodity strategist at ANZ, said in ?a note. Aluminium fell 0.8%, to $3,239.50 per ton. Zinc dropped 1.3%, to $3.719.50, and tin declined 0.7%, to $55,355. Nickel gained?0.3% at $16,885 and lead edged up 0.1% at $1,889.50 after an Indonesian spokesperson stated that the planned exchange of strategic and mineral commodities in the country would include nickel. (Reporting and additional reporting by Solomon Cefai, Singapore; editing by Rashmi aich and Harikrishnan Nair.)
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Stocks and bonds are jarred by Middle East tensions that disrupt the calm market
The selloff of U.S. government debt picked up speed?on?Tuesday, pushing the 30-year 'Treasury yield?to a two-decade high. Fears?of a Middle East war escalation fueled inflation fears and pressured the stock market. Brent crude oil prices rose for a third day in a row after Washington and Tehran's latest signals crushed hopes that the conflict would be resolved soon. The market's response shows that tensions remain high in the Middle East, and a new escalation could have a ripple effect on oil, bonds, currencies, and stocks. The market's reaction has also shaken the calm that had been established after the recent run of soft U.S. data eased fears about Federal Reserve rate hikes. According to CME FedWatch, traders see a 36.6% probability of a rate hike at the Fed meeting in September, down from 48.4% one week earlier. George Bory is the chief investment strategist at Allspring Global Investments. He said that if "things unravel and conflict escalates," a mid cycle adjustment may be necessary. The yield on?U.S. The yield on the 30-year Treasury bond increased by 1.64 basis points to 5.3264%. This is its highest level in nearly 20 years. The 10-year Treasury bond rose 1.59 basis points to 4.7399%. Pressure also spread to the other major government bonds markets. The yield on Japan's 10-year bond was close to hitting 3%, the first time in the late 1990s. Meanwhile, the euro zone bond rates were at record highs. The STOXX Europe 600 index fell by 0.52%, to 652.99. Futures for the S&P 500, Nasdaq 100 and other Wall Street indexes fell 0.54%, 1.05% and 0.54%, respectively. MSCI's global stock index fell 0.28%, to 1,153.38. High bond yields may make stocks less appealing and increase borrowing costs for companies that invest heavily in AI infrastructure. Wall Street's fear gauge, the CBOE Volatility Index has reached its highest level in over a week. The strategists of Gramercy Funds Management write that "the unresolved situation argues in favor of maintaining hedges to protect against renewed volatility in oil and inflation." Investors will also be waiting for the minutes of the Fed’s latest policy meeting scheduled to be published on Wednesday. The central bank's Jackson Hole Symposium next week will be closely scrutinised to get clues about policymakers' interpretations of the latest economic statistics. The minutes of FOMC meetings are more valuable than the FOMC policy statement or the press conferences of (Fed Chair Kevin) Warsh, Jonas Goltermann said. The Federal Open Market Committee is the Fed's interest-rate-setting body. Reporting by Niket Nishant in Bengaluru, and Gregor Stuart Hunter, in Singapore. Editing by Sonali Paul and Clarence Fernandez; Muralikumar Aantharaman, and Gareth Jones.
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Why tropical goods are exposed by a super El Nino
Forecasters have said that El Nino is intensifying and could become a "very strong" event, which would increase temperatures, disrupt rainfall patterns and pose risks to crops around the world. Why are soft commodities (commodities grown in tropical areas) called "especially vulnerable" and what is El Nino? EL NINO El Nino occurs when trade winds weaken, causing a periodic increase in sea surface temperature. El Nino occurs in nature every two to seven year and lasts between nine and twelve months. Weather patterns typically result in warmer temperatures around the world, droughts in some regions, such as Australia, South and Southeast Asia and Southern Africa, but heavy rain in others, including southern South America and United States. The U.S. Climate Prediction Center updated its El Nino prediction last week. It said there was a greater 90% chance of an extremely strong event occurring during the fall and winter in northern hemisphere 2026-2027. El Nino's dryness, heat and excess rains will be a major blow to farmers who are already struggling with price increases for diesel and fertilisers due to the U.S./Israeli war against Iran. Soft commodities?have consistently experienced strong price increases during previous El Nino episodes. According to WisdomTree, every strong El Nino over the past 55 has led to a reduction in cocoa production. The last El Nino was moderate to strong and lasted from mid-2023 until mid-2024. West Africa, the top cocoa-growing region, was initially flooded with double its usual rainfall. This left cocoa trees vulnerable to a fungus disease. In 2024 the weather pattern changed and West Africa experienced intense heat, and Harmattan wind?that was unseasonably strong and dry, causing disease-weakened trees drop their flowers. Everyone thinks El Nino only causes droughts in West Africa. It is not always true. Climate change can sometimes lead to too much initial rain. Jim Roemer, of Best Weather consultancy, said that this was his biggest concern at the moment. Ivory Coast, which is the second largest bean producer in the world, and Ghana are responsible for about half of the global cocoa production. Ecuador, the third largest bean producer in the world, is prone to excess rain during El Nino episodes. Cocoa prices almost tripled by 2024, after the West African harvest was a failure. By late 2024 they had reached record prices of over $12,000 per metric ton, making chocolate more expensive than most industrial metals. COFFEE El Nino can be particularly problematic for robusta as it brings increased temperatures and decreased rainfall to the top coffee-growing country Vietnam, and No. From the middle of the season onwards, Indonesia is the No. 3 coffee producer. The two countries, which together account for about 50% of world's robusta production, are hit by adverse weather during the crop development stage. The effects are felt in the fourth quarter during harvest. Analysts at Citi said that the dryness in Vietnam and Indonesia may reduce robusta coffee yields. El Nino has a more subtle impact on arabica coffee. Nearly half of this type is grown in Brazil. Carlos Santana of EISA's trader ECOM subsidiary said that El Nino may initially prove beneficial for the crops that Brazil is currently harvesting as higher temperatures could prevent damaging winter frosts. El Nino, on the other hand, is more likely to affect output in the long term. It will bring heat and dryness to Brazil's coffee growing regions during the fourth quarter, when the new crop is being developed. El Nino is a phenomenon that brings excessive rain to Brazil, a country with arguably the largest sugar harvest. The No. In contrast, the weather pattern in India, which is ranked No. 2 among sugar exporters and no. 2 among sugar producers, tends to reduce rainfall during the summer monsoon. Thailand is the No. India is expecting the monsoon of 2026 to bring the lowest rainfall for 11 years. Showers will be 90% below average during the period from June to September when crops are being developed. Carlos de Mello of Hedgepoint, the head of sugar at Hedgepoint, estimates that a moderate El Nino would cut India's production by around 1 million metric tonnes. The above-average rainfall that El Nino brings to Brazil's sugar region could benefit the crop next year. Hedgepoint's de Mello stated that it was "hard to imagine a bull-market scenario for El Nino", because of the potential benefits El Nino could have on Brazil's sugar crop in 2027. Brazil exports about half the world's total sugar.
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Copper drops as China data weakens and Mideast conflict weigh
The price of copper fell on Tuesday after a previous session that saw it reach a six-month high. This was due to the market absorbing a series of disappointing economic reports from China, a key consumer, and the expiration of the U.S. - Iran 'temporary ceasefire' agreement. By 0700 GMT, the benchmark three-month price of copper at the London Metal Exchange had fallen by 0.13% to $14,139.5 per metric tonne. The Shanghai Futures Exchange's most traded copper contract fell by 0.97%, to 107 930 yuan per ton. "Weaker-than-expected economic data in China weighed ?on sentiment across the base metals sector," Daniel Hynes, senior commodity strategist at ANZ, said ?in a note. Data from the National Bureau of Statistics revealed that China's factory production grew by 4.5% from a previous year in July, a decline from June. This was below expectations. The fixed-asset investment of the country, including investment in copper-consuming industries like real estate and infrastructure, declined 6.7% in the first seven month of 2026 compared to an expected 6% drop. The higher price of copper imports has already impacted China's demand. The Yangshan Copper Premium On Monday, the price of a ton of oil fell to $85 per ton, the lowest level in more than a month. However, the premium was still?nearly double as high as it was at the beginning the year. Brent crude also increased, as the Middle East war negotiations remained in a deadlock. The price of crude oil could increase inflationary pressure and lead to higher interest rates. This would dampen economic activity, and put pressure on commodities that are dependent on growth like copper. Nickel prices rose after an Indonesian spokesperson for the president said that the planned Indonesian exchange of strategic and mineral commodities will likely include nickel. Nickel added to the LME at 0.15% and the?SHFE at 0.44%. Aluminium, zinc, lead and tin all fell in price. (Reporting by Solomon Cefai; Editing by Rashmi Aich and Harikrishnan Nair) (Reporting and editing by Rashmi aich, Harikrishnan Nair).
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As inflation and fiscal concerns take hold, bond markets grip from US to Japan
The cost of borrowing long-term from the United States for Japan and Germany reached their highest level in decades on February 2, as new inflation concerns?added lingering fears about fiscal pressures in major economies. This dealt bond markets a "fresh blow". The 30-year bond yields on the United States' government bond market, which is considered to be one of the most important in terms of systemic importance, reached their highest level since 2007. Oil prices rose above $90 per barrel, causing inflation fears as U.S. peace hopes with Iran faded. In Japan, the fear of inflation and expectations that Bank of Japan would raise interest rates in September pushed benchmark borrowing costs for 10-year bonds to a three decade high of just under 3%. In Europe, Germany's Bund yield reached its highest level since 2011 while French yields hit their highest levels since 2009. Bond prices fall when the yield of a bond increases. Charu Chanana is the chief investment strategist of Saxo Bank, Singapore. She said that "the market demands a higher premium for holding long-term government debt". Analysts said that the recent sales were due to a combination of factors, including the competition for capital by AI hyperscalers who have increased their?bonds sales in this year. This, coupled with the rising budget deficits as well as concerns about the Federal Reserve's new chief Kevin Warsh and the lack of clear communication, are all contributing factors. As sovereign debt is the benchmark for corporate borrowing and other loans, such as mortgages, the selloff of government bonds, which is exacerbated by inflation, has ripple effects throughout economies. The persistently higher yields of U.S. bonds sold last week also highlighted investor appetite for government debt against the backdrop of increasing fiscal deficits. U.S. Treasury 30-year yields last traded at around 5.32%, but they rose nearly 40 basis points in the last month, their largest monthly increase since December 2024. Data from the Treasury Department showed that foreign holdings of U.S. Treasuries fell in June. The declines were led by Japan, UK, and China. Japan is the biggest foreign investor in U.S. Bonds. Rising bond yields in Japan, where borrowing costs for 30-years are just over 4%, are also starting to attract Japanese investors back home, who were traditionally major buyers of U.S. government debt. Chanana noted that "JGB yields have become more competitive due to the normalisation of policy by the BOJ," referring to the fall in Japan's U.S. Bond holdings. "That doesn't mean Japan has abandoned Treasury bonds, but Washington cannot assume that additional supply will be consumed at yesterday's rates."
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The planned Indonesian commodity exchange is likely to include palm oil, nickel and coal
A?presidential spokesman said that the planned Indonesian exchange for "minerals and?strategic commodity" would likely include palm oil and nickel, as the government prepares to launch the bourse at?January 1st. The plan was announced by President Prabowo during his?proposal for the 2027 budget speech on Friday. He said that Indonesia's goal was to establish its own benchmark price for many key commodities. Prabowo's latest effort to use the vast natural resource reserves to boost the economy is to create an exchange. He announced policies to centralise commodity imports in May. Southeast Asia is home to the largest economy in the world. It's also a major exporter of thermal coal, nickel, coffee beans, and other commodities like bauxite and copper. On Monday, the day after Indonesia celebrated its Independence Day, Presidential spokesperson Prasetyo hadi told journalists that the government was currently working out the details of the plan. This includes the type of commodities to be traded at the exchange. He said: "Certainly, it will cover commodities that are primary products of ours, such as CPO, nickel, and coal." Reporters were told by Friderica Widyasari, the chief of OJK's Financial Services Authority, that rules will be introduced for the bourse before September 17. She said that the OJK regulations will include a phased transition for trades to the new exchange. A separate presidential decree, however, will list the commodities which will be traded on the bourse. Indonesian Nickel Miners Association welcomed the plans, as they have been advocating for a mineral exchange. In a Tuesday statement, the association's chairperson Nanan Soekarna' said that the announcement reflected the government's recognition that Indonesia no longer should be the price taker of commodities it supplies?in large volumes to global market. The association said the exchange would provide a more transparent price that reflects actual production levels in major?production centers. Meidy Katrin Lengkey, secretary general of the association, said: "We stress that the success will be determined by the integrity of the data, the clarity in governance and the participation of national miners right from the start, not how quickly features are launched." Indonesia already has a 'commodity exchange' for palm oil, some commodities and tin. Tin exports must go through the local exchange. However, trade at the palm oil bourse is limited. Reporting by Fransiska Naangoy, Bernadette Cristina, Stefanno Sulaiman, Editing by David Stanway
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Oil prices continue to rise as US-Iran ceasefire ends
The bond yields rose on Tuesday, reaching their highest level in decades. Oil prices were up for a third consecutive day. Stocks in Asia were under pressure as the U.S./Iran truce ended and Tehran warned of a "fully offensive military posture". The yield of the 30-year Treasury Bond in the United States rose by 1.6 basis points, reaching its highest intraday level since almost 20 years. The 10-year counterpart rose 1.8 basis points to 4.7399%. Charu Chanana is the chief investment strategist of Saxo Bank, Singapore. She said that if this trend continues, it will have a significant impact on the financial market, increasing the hurdle rates for stocks and tightening the financial conditions. This would put pressure on companies with leverage and governments. "Asia has already started to show some of the spillover." S&P 500 futures fell 0.4%, while MSCI's broadest Asia-Pacific index outside Japan dropped 0.8%. This reversed early gains as stocks in South Korea and Taiwan weighed down on the benchmark. South Korea's KOSPI reversed a gain of over 3% after the Seoul market returned from a holiday. The Nikkei fell 2.1%. Brent crude futures rose 0.4% to $91.26 per barrel as the rally in oil prices continued for a third day. The yield on the 10-year Japanese Government Bond rose by 1.5 basis points to 2.935%. This is a record high for the past three decades. Masahiko loo, senior fixed-income strategist at State Street Investment Management, Tokyo, said that the pressure on bond markets felt more like a "buyers' strike" than a "sellers' panic". Markets are rediscovering the term premium as fiscal deficits, increased bond supply and AI-driven capital expenditure all compete for capital. The S&P 500 fell 0.5% overnight on Wall Street while the Nasdaq Composite was down 0.3% as traders reduced bets that the Fed would soon raise interest rates. Analysts questioned why the rise in bond yields hadn't led the U.S. President to back down on his stance against the Iran War. "Typically, moves over 4.65% in the U.S. 10 year?have been accompanied by some soothing remarks from the Trump Administration, usually centred around an imminent'resolution' to the war against Iran," ING analyst wrote in a report. They added, "This time we don't hear the same." "In reality, the latest indications point to no imminent resolution as the shaky sixty-day truce has come to an end." The U.S. Dollar Index, which measures the strength of the greenback against a basket six currencies, rose 0.1% to 99.65. This is a slight improvement from its two-month low. Gold fell 0.6% to $4,389.44 and ended two days of gains. Bitcoin was down by 0.3% to $64,150.36 while ether fell 0.6% to $1,893.16. (Reporting and editing by Gregor Stuart Hunter, Clarence Fernandez, Muralikumar Anantharaman and Sonali Paul)
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Gold falls on higher oil and Treasury yields; Fed minutes are in focus
Gold prices fell on Tuesday due to?higher Treasury rates and oil prices?. Traders were also waiting for the minutes of the U.S. Federal Reserve policy meeting in July for clues about the future interest rate outlook. As of 0624 GMT spot gold fell 0.4%, to $4397.42 an ounce. U.S. futures for delivery in December dropped 0.5%, to $4452.90. The yields on the benchmark 10-year U.S. Treasury notes extended gains and raised the opportunity costs of holding non-yielding gold. Prices of oil?increased after Iran announced it would adopt a 'fully offensive' military posture following a breakdown in negotiations to end the war with the United States. Washington also ruled out the extension of a temporary ceasefire. Soni Kumari, an ANZ analyst, said that oil prices will continue to be one of the key factors keeping gold under pressure. The situation in the Middle East is uncertain and the price of oil has been rising. The expectations of traders around the Fed's policy rates will be crucial for gold. Kumari also said that technical levels would be a key factor. Energy prices that are higher tend to increase inflationary fears, and this in turn can lead to expectations of higher interest rates. Gold is often seen as a hedge to inflation. However, rising interest rates can reduce the appeal of bullion. After unexpected job losses, lower than expected consumer price inflation, and weaker retail sales, the market's pricing for a quarter-point increase in September has shifted to "nearly 65% chance" of a "hold". Investors will also be awaiting the minutes of Fed's latest policy meeting. The release is scheduled for Wednesday. According to Wang 'Tao, technical analyst, spot gold could test support at $4381. A break below this level would open up the way to the $4320-$4351 range. Silver fell 0.7% per ounce to $65.32, platinum dropped 0.6% to 1,759.63, and palladium was down 0.6% at $1,325.47. (Reporting and editing by Subhranshu Sahu, Sherry Jacob Phillips and Ashitha Mitra from Bengaluru)
Andy Home: ROI-China eases Iran War Aluminium Shock, but at a Cost
China is now a major swing supplier of aluminum to Western markets that are reeling due to the Iran War's impact on production in the Gulf. The world's largest aluminium producer, China, has increased exports of metals and alloys as well as semi-manufactured goods (semis) to help cushion the impact in the global supply chain.
The timing is fortunate from a?China perspective. The?national?production has reached record highs, despite a stuttering growth in domestic demand.
While?China's imports have temporarily relieved the market, they may not be the best solution for the long-term.
TAX GAP: MIND THE TAX GLOBAL
Tax code is the primary factor that determines the composition of China's aluminum export flows. The primary metal is subject to a 30% tax on exports, while alloys and semis are exempt.
The fact that the bulk of China's exports are alloys and products like bar, rod, and tube should not be a surprise. It's not that primary metal exports haven't responded. The first-half volume?rose 32% on an annual basis to 38,400 tons. However, the majority of this metal likely is Western aluminium that has been stored in bonded storage and is now being rerouted back to Western markets. In January-June, China "exported", 9,700 tons to the U.S. but U.S. Customs only counted 70 tons in Chinese imports during the same period. The exports of alloy have grown faster and nearly doubled to 238,500 tonnes in the first six months of 2026. In fact, China became a net alloy exporter in June for first time since 2019. China also produced an additional 500,000 tons in semis. The country's total volume was up 18% on a year-on-year basis, at 3.2 millions?tons, from January to June.
The pace of shipments continues to accelerate. The 695,000-ton total for June was a monthly record.
DISPLACEMENT - These products can't replace the metals and alloys lost in the Gulf. They 'act to suppress the demand for unwrought steel by substituting it further up the processing chain.
The rub is in the details. This has led to a shift of manufacturing from other countries to China. China's semis are a source of controversy for Western policymakers, and many countries have responded with anti-dumping duties on a variety of products. Beijing has removed the 13% VAT export rebate for products in December 2024, partly to address these concerns.
Last year, exports dropped 18% to 890 000 tons as Chinese processors shifted to the domestic market.
The Iran war, however, has changed the dynamic once again. It has reinvigorated outbound flows due to a combination of a structurally stressed Western Supply Chain and a lax internal market.
Cost of Comfort
Citi analysts claim that the Chinese demand for aluminium has flattened in the first half 2026. The end-use tracker of the bank fell by 0.4% year-on-year due to weakness in the traditional end-use sector, particularly construction.
International Aluminium Institute reports that primary aluminium production grew 2.2% in the same time period. The ?country's smelters are now operating close ?to or even slightly above Beijing's mandated 45-million-ton-per-year capacity cap.
Stocks at the Shanghai Futures Exchange, although they have fallen in recent weeks, still remain higher than London Metal Exchange inventories of 358,000 tonnes, which includes metal stored 'off-warrant.
China has the ability to keep exports high for some time.
The LME market has been reassured by this, as?aluminium is no longer paying the war premium. The price of aluminum has dropped from $3,787.50 a ton, which was a four-year-high at the beginning of June, to $3,270.00. This is only $100 higher than it was on February 28, before Israel and the U.S. attacked Iran. The longer it takes the West to balance its economy with Chinese products, the higher the long-term costs for Western semi-finished product manufacturers.
Andy Home is a columnist at. This column is great! Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
(source: Reuters)