Copper prices dropped to a one-week low on Thursday as renewed Middle East tensions boosted the dollar and oil, sparking inflation and slowdown fears. US strikes targeting an Iranian drone operation in the Strait of Hormuz contributed to market unease, with base metal prices trading sideways pending a resolution in the region.
SMM reported that Middle East tensions repeatedly disrupted markets on May 27, with intraday copper prices rallying before retreating after each escalation headline. The risk extends beyond sentiment — sulfur and sulfuric acid availability for copper smelting faces potential disruption, as the Strait of Hormuz is a critical corridor for these inputs.
Despite the pullback, broader trend data shows copper still up 37.68% year-on-year, indicating a temporary risk-off move within a structurally tight, elevated market. The physical market remains highly sensitive to supply-side disruption risks, according to Wood Mackenzie, with mine disruptions in Chile, Indonesia, and Peru continuing to constrain global supply.