Base Metal Prices Fall Amid Stronger U.S. Dollar and Ongoing Trade Negotiations

Base Metal Prices Fall as U.S. Dollar Strengthens, Trade Talks Loom

Base metal prices have experienced a decline as the U.S. dollar strengthened, making dollar-denominated commodities more expensive for foreign buyers. The LME three-month copper price dropped by 0.65%, reaching $9,458.50 per ton, while LME three-month aluminum fell by 1.3%, settling at $2,397.00 per ton. This decline comes despite the relative strength of metals compared to previous drops triggered by disappointing Chinese economic data released on April 30, which had initially raised concerns about demand.

A stronger U.S. dollar is typically a factor that weakens demand for commodities like base metals, as they become more expensive for buyers using other currencies. The dollar’s rise has drained interest from foreign investors, contributing to the price fall of metals such as copper and aluminum. However, analysts note that copper remains relatively resilient, thanks in part to a supply squeeze, which has supported prices despite weaker economic indicators from China.

Despite these recent price drops, analysts from RBC Capital Markets suggest that metals are still performing relatively strong, especially compared to the significant decline seen earlier this year. They expect volatility to continue in the base metal markets as the ongoing U.S.-China trade negotiations are likely to remain a major price driver, particularly as tariff headlines continue to create uncertainty and market swings.

Looking forward, market participants are closely watching for any developments in trade talks and economic data, which could have a considerable impact on the trajectory of base metal prices. Tariffs and supply chain disruptions will likely keep metals in a state of volatility, especially if there are any shifts in trade policy between the U.S. and China.