Copper on the London Metal Exchange fell further on Monday, with inflation concerns linked to the Iran conflict affecting demand expectations. Weaker Chinese economic data and a firmer US Dollar also added pressure.
Rising tensions between the US and Iran, alongside higher oil prices, increased fears of persistent inflation. This raised expectations of a tighter monetary policy response.
The fall follows a strong recent period, with copper retreating from highs reached last week as macro risks grew. Even after the pullback, copper remains about 8% higher year-to-date.
Earlier gains were supported by tech-related demand, supply limits and possible US tariff measures that could reduce global availability. Near term, copper may stay under pressure as macro risks continue.
We are seeing copper extend its losses as the market digests several pressures at once. Rising tensions related to the Iran conflict, combined with some disappointing manufacturing data out of China, are creating near-term headwinds. A strengthening US Dollar is also weighing on prices, making the metal more expensive for buyers using other currencies.
This pullback follows a significant run-up, with prices retreating from the highs we saw just last week. The recent April 2026 inflation report, which came in hotter than expected at 3.6%, has heightened fears of a more aggressive central bank policy. The Dollar Index (DXY) has subsequently climbed to 106.5, reflecting market anxiety over prolonged inflation.
The latest Chinese Caixin Manufacturing PMI figure for April 2026 dipped to 49.8, indicating a slight contraction and reviving concerns about industrial demand that we saw throughout 2025. This weaker data, coupled with persistent worries about their property sector, suggests a slowdown in consumption from the world’s largest copper buyer. For derivative traders, this environment points toward short-term caution.
Given these dominant macro risks, we believe there is room for further downside in the coming weeks. Traders might consider buying put options to hedge long positions or speculate on a move toward the $10,500/tonne support level. The increased volatility also makes selling out-of-the-money calls a potentially attractive strategy for generating income.
However, we must remember the bigger picture, as copper is still up around 11% year-to-date. The long-term demand story from data centers, the AI boom, and the green energy transition remains firmly intact. We all recall how the sudden closure of the Cobre Panama mine back in late 2023 demonstrated the fragility of global supply.
This current weakness could therefore present an opportunity for those with a longer-term bullish outlook. Selling cash-secured puts at strike prices below the current market level could allow traders to either collect premium or acquire contracts at a lower cost basis. For us, this is a classic conflict between short-term macro fears and long-term structural demand.
