Copper falls as Middle East fighting renews inflation risks

Focus was also on falling copper inventories. Copper stocks in LME-approved warehouses have dropped more than 20% since the end of May to a four-month low of 305,200 tons. MCUSTX-TOTAL

Cancelled warrants, or metal earmarked for delivery, at nearly 43% indicate another 130,525 tons is due to leave the LME system.

Industry sources say much of this copper is heading for the United States, where U.S. President Donald Trump is considering tariffs on the metal used in the power and construction industries.

Traders and producers expecting tariffs on imports have been shipping metal to the United States since President Donald Trump ordered a national security probe in February last year.

Copper stocks in warehouses registered with Comex at record highs of 676,534 short tons, or 613,741 metric tons, have climbed nearly 600% since then HG-STX-COMEX.

In warehouses monitored by the Shanghai Futures Exchange, copper stocks CU-STX-SGH at 100,271 tons have dropped nearly 80% since the middle of March.

Rapidly falling stocks are creating a higher price floor, a trend seen across most metals as material continues to leave warehouses, said Alastair Munro, senior base metals strategist at broker Marex.

Markets are looking ahead to Kevin Warsh's debut appearance before Congress as Federal Reserve Chair and U.S. inflation data for clues to dollar direction.

Expectations of tighter monetary policy in the United States have boosted the U.S. currency, making dollar-priced metals more expensive for holders of other currencies and weigh on demand.

Aluminium CMAL3 was little changed at $3,138, zinc CMZN3 retreated 1.3% to $3,569, lead CMPB3 fell 1.1% to $1,876, tin CMSN3 slipped 0.1% to $53,080 and nickel was down 1.2% to $16,545.