Copper rally slows as prices weigh on demand

Elsewhere, the red metal was supported by an improved macroeconomic outlook and better risk sentiment from cooling fears about escalation in the Middle East.

High copper prices are nonetheless beginning to weigh on demand, raising questions about the strength of seasonal demand in the second half of the year, analysts from Chinese broker Everbright Futures said in a note.

The Yangshan copper premium SMM-CUYP-CN, an indicator of physical demand in the largest consumer China, ticked down to $110 a ton on Tuesday, according to data provider SMM.

The red metal has been buoyed by waning inventories as more material was pulled into the U.S. ahead of potential tariffs on refined copper.

Total copper stocks on LME-registered warehouses MCUSTX-TOTAL have fallen by nearly 40% since the end of May.

Meanwhile, "the US imported more than 200,000 tons of copper in July, the biggest monthly inflow since 2014," Daniel Hynes, senior commodity strategist at ANZ, said in a note.

Supply pressure for physical material was reflected in the LME cash-to-three-month spread CMCU0-3, which was in a backwardation of $102.38 per ton.

Copper prices ticked up on Wednesday but remained below yesterday's highs, as waning inventories and improving risk sentiment offered support even as high prices threatened to dampen demand.

Benchmark three-month copper CMCU3 on the London Metal Exchange was up 0.18% at $14,091.5 a metric ton by 0700 GMT.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 rose 0.96% to 107,340 yuan ($15,908.82) a ton.