(Bloomberg) — Copper edged lower as traders eyed the prospect of peace negotiations between the US and Iran.
The US and Iran are considering extending their ceasefire that ends on Tuesday by another two weeks to allow more time to negotiate a peace agreement, according to a person familiar with the matter.
Mediators between the warring sides are trying to set up technical talks to resolve the most contentious issues, said the person, who asked not to be named discussing sensitive matters. Those include reopening the Strait of Hormuz and Iran’s nuclear enrichment, they said.
Most base metals have been whipsawed since the conflict erupted, with prices initially falling due to concerns over the impact of supply chain disruption and slowing economic growth. Risk appetite returned after a temporary ceasefire was agreed last week, and has been reinforced by reports that Washington and Tehran are looking to arrange a second round of talks in the coming days, along with signs of Chinese demand.
“Copper’s coming back. First the restocking in China, then the inflation concerns dissipated amid the peace talks,” said Fan Rui, an analyst with Guoyuan Futures Co. “The worst is over.”
Chinese fabricators have stepped up purchases after domestic copper prices fell below 100,000 yuan a ton in recent weeks due to the war, leading to a significant drawdown in domestic inventories.
Despite the near-term economic impact of the energy crisis, the sharp shock could also prove beneficial for the metal’s long-term growth as economies pivot toward electrification, Trafigura Group analyst Henry Van said at an industry conference in Santiago.
“All of the big trends that have been pushing copper higher are now going to be supercharged,” he said. “There is a bigger incentive than ever before to do more electrification and insulate energy consumption from geopolitical shocks.”
Copper is expected to return to record highs this quarter as China “puts the foot down” on purchasing for its electricity grid, according to Nicholas Snowdon, chief metals economist at Mercuria Energy Group Ltd.
Mercuria sees “intense global competition” for copper cathode, with record high prices a matter of when not if, Snowdon said Wednesday in a presentation at an industry conference in Santiago.
The copper market is also weighing the prospect for a further rush to import copper to the US, after front-month prices on New York’s Comex exchange rose to a premium of $283 a ton above those on the LME this week, the highest since December.
US President Donald Trump’s planned tariffs on copper imports into the country led to a surge in Comex prices last year and enabled traders to make huge profits shipping copper into Comex warehouses in the US. Investors still expect a decision on tariffs for refined copper by the end of June, when the Department of Commerce is set to deliver an update on US copper markets.
Copper was down 0.3% to settle at $13,247.50 a metric ton on the London Metal Exchange. Comex copper prices were little changed.
Aluminum – which has rallied strongly since the war began, given supply concerns due to the effective closure of the Strait of Hormuz and attacks on smelters in the Persian Gulf region – climbed 1.6% to settle at $3,621.50 a ton.
The aluminum market has now likely reached a “metaphorical point of no return for supply in the coming quarters, where no matter what happens regarding transit of material in and out of the Strait of Hormuz in the near term, the global aluminum market will face a serious and prolonged supply outage,” analysts at JPMorgan said in an emailed note this week.
The bank is now expecting a 1.9 million-ton supply deficit for 2026, which would the largest since 2000 when accounting for market size. It sees the potential for prices to breach $4,000 a ton in the coming months, analysts led by Gregory Shearer said.
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