(Sept 9): Industrial metals retreated as escalating hostilities in the Middle East underscored lingering headwinds, after a key gauge of prices on the London Metal Exchange surged to an all-time high.

The LME’s all-in index of six base metals hit a record on Tuesday as copper soared to fresh highs, aluminium extended gains and zinc breached US$4,000 (RM16,276) a tonne for the first time since 2022. Supply-side issues have played a big part in the advance, but the Iran war remains a risk for prices by threatening global growth.

In the latest flare-up of violence, the US military said it destroyed five Iranian tankers carrying crude oil after Tehran tried to strike a US Navy warship. Brent crude rallied towards US$100 a barrel, fuelling concerns about inflation ahead of US data on consumer prices due Friday.

“Caution remains warranted at the macroeconomic level,” Guangzhou Futures Co wrote in a social media note. “There’s still uncertainty about US inflation, and shifting expectations for Federal Reserve policy can potentially put downward pressure on copper prices.”

The LMEX Index has gained more than 40% from a year ago as metals markets tighten. For copper, the shift of hundreds of thousands of tonnes to the US in anticipation of import tariffs has left the LME market underserved. Zinc has suffered from significant pressures on ore supply, while the Iran war has crimped flows of aluminium from the Middle East.

On Wednesday, copper fell 0.6% to US$14,625 a tonne as of 10.36am in Shanghai as all LME base metals retreated.

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