Shanghai copper edges lower as rate fears offset supply support

Among SHFE metals, aluminium SAFcv1 ticked 0.13% higher, zinc SZNcv1 added 0.44%, lead SPBcv1 gained 0.62%, nickel SNIcv1 lost 1.23% and tin SSNcv1 shed 1.3%.

Zinc was an August standout, gaining 5.87% amid supply tightness concerns.

Copper nudged down on the Shanghai Futures Exchange (SHFE) on Monday, as bets of higher-for-longer U.S. interest rates offset supply concerns, which earlier had boosted the metal to a monthly rise in August.

The most-traded copper contract on the SHFE SCFcv1 edged 0.2% lower to 108,400 yuan ($16,129.27) a ton. The London Metal Exchange was closed on Monday for a public holiday in Britain.

Hawkish interest rate comments from U.S. Federal Reserve Chairman Kevin Warsh are exerting downward pressure on copper prices, analysts from Chinese broker Galaxy Futures said in a note.

In a closely watched speech at the Jackson Hole symposium last Friday, Warsh signalled that the Fed may need to raise rates if inflation remained above target.

Traders on Sunday priced in a 60% chance that the Fed would raise rates at its September meeting, up from 40% a week earlier, according to the CME's FedWatch tool.

Higher-for-longer rates are a concern to growth-dependent commodities like copper as they can dampen economic activity.

The dollar was also higher after Warsh's speech, hovering near a two-week high and weighing on copper, which is traded in the U.S. currency, by making it more expensive for buyers using other currencies.

Despite inching down on Monday, SHFE copper was set to notch a higher monthly close, gaining 2.97% in August. The price has been supported by inventory worries, as the commodity has been sucked into the U.S. ahead of a potential tariff on imports of refined copper there.