Base Metals Lower on Outlook for U.S. Rate Hike and Demand Outlook

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• LME Aluminum 3M Select trades $-77 lower to $3470 at 8:26:25 AM

  • (Bloomberg) – Metals from aluminum to zinc dropped after tensions in the Middle East escalated and expectations for US rate hikes weighed on the demand outlook for commodities.  Sentiment soured as stocks dropped after US forces struck Iran. The prolonged war has stoked inflation and raised the prospect of higher interest rates that could slow global growth and demand for metals. Traders are waiting on Wednesday’s US inflation report, which may provide the clearest signal yet on whether rates will stay elevated for longer. Bond traders are piling into positions targeting multiple Federal Reserve hikes in the coming months, with some looking for a move as early as September.  The metals market is focusing on tighter global liquidity following robust US employment data, which is bearish for risk assets from gold and silver to industrial materials, said Li Xuezhi, research head at Chaos Ternary Futures Co.  Long-term demand prospects are still intact, however, driven by increased spending on technology. The latest headline is that China is preparing to spend around 2 trillion yuan ($295 billion) over the next five years on building data centers. Global spending on data infrastructure has become a key pillar of the bullish outlook for copper and other metals in recent months.  The idea of building a nationwide computing network was laid out in China’s five-year plan earlier in 2026, and the investment is in line with expectations and isn’t affecting prices in the short term, said Li.

• LME Copper 3M Select trades $-191.25 lower to $13422.50 at 8:26:30 AM

• CME HRC Steel last traded at $1120 and $-5 lower at 8:03:18 AM

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