Copper prices fell on Monday, indicating that concerns over inflation and interest rate trajectories in the backdrop of rising energy prices in the Middle East outweighed the support from China's better-than-expected economic data for January to February. The Refinitiv flash report you provided shows that the main copper contract on the Shanghai Futures Exchange closed down 0.87% to 99,720 yuan per ton, having fallen as much as 1.85% intraday; at 0730 GMT, LME three-month copper was at $12,760 per ton, down 0.16%. Meanwhile, Reuters reports show Brent crude remaining above $100 per barrel, with global markets reevaluating the impact of war on inflation and central bank rate cut expectations.
Chinese Data Provides Support but Doesn't Change Sentiment
Data released by China's National Bureau of Statistics on Monday was largely stronger than expected. According to Reuters reports, the added value of large-scale industries grew by 6.3% year-on-year, beating the forecast of 5.0%; retail sales of consumer goods grew by 2.8%, higher than the estimated 2.5%; fixed asset investment grew by 1.8%, compared to a market forecast of a 2.1% decline. These data suggest that China's economic momentum at the beginning of the year was stronger than previously judged by the market, theoretically supporting industrial metals like copper related to power grids, manufacturing, and infrastructure.
Oil Prices and Interest Rate Expectations Reemerge as Pricing Dominants
However, the core variable suppressing metal sentiment at the moment is the secondary inflation risk brought by the energy shock. According to a Reuters report on March 16, Brent crude has risen to around $106.30 per barrel, significantly up from less than $60 in January; the Fed is set to update its policy outlook this week, and the war has led the market to lower its expectations of a rate cut within the year. For copper, this means that even if Chinese demand improves marginally, financial conditions and the dollar environment could pose a stronger near-term constraint. The analysis here regarding "financial conditions forming constraints" is based on the relationship between oil prices, rate cut expectations, and commodity pricing.
Aluminum Prices Diverge Reflecting Supply and Demand Dislocation
The aluminum market presents a more complex structure. The flash report you provided shows that SHFE aluminum prices fell 0.45% to 25,170 yuan per ton, but LME three-month aluminum rose 0.48% to $3,456. A prior Reuters report shows that Bahrain's Alba has started closing 19% of its capacity to cope with ongoing raw material and logistics pressures due to disruptions in the Strait of Hormuz; India's Hindalco also issued a notice of production disruption for some extruded aluminum products due to force majeure in Middle East gas supplies, although the company said the business accounted for less than 0.1% of its overall operations. This means that supply concerns in overseas markets are providing support for LME aluminum prices, while the Chinese market is more influenced by macro sentiment and local demand rhythms.
