(Bloomberg) — Industrial metals declined as investors remained concerned about global economic growth due to mixed signals about prospects for a US-Iran deal to end the war.
US President Donald Trump said Wednesday he was “not satisfied” with negotiations with Iran, damping expectations for an imminent accord. The US denied an Iranian media report on a draft interim deal that said traffic through the Strait of Hormuz could return to normal within a month of it coming into effect.
Metals including copper have traded in a tight range in the past two weeks as investors monitor the progress toward a ceasefire deal. The absence of a deal risks dragging the global economy into a slowdown, while an end to the conflict would ease concerns about a prolonged hit to global growth that would crimp metals demand from manufacturers.
Meanwhile, copper traders are once again scouring the world for metal to send to the US, as renewed speculation about import tariffs revives a trade that’s upended the $300 billion-a-year market.
Aluminum slipped along with other industrial metals, but remains the best performing base metal on the London Metal Exchange since the Iran war began in late February.
The light metal has risen more than 15% as the effective blockage of Hormuz disrupts metal supply from the Middle East, which accounts for nearly one-tenth of global supply. Damages at two large smelters by Iranian drones and missiles in the region added further upside to prices.
The Middle East is on track to lose up to 3.5 million tons of aluminum production this year, and the gap left behind is too large for the rest of the world to fill, according to Charvi Trivedi, principal analyst at Wood Mackenzie. While Chinese and Indonesian smelters are accelerating output to capture lost market share, global supply is on track to contract by nearly 3% this year, according to Trivedi.
Copper futures on the LME fell 0.7% to settle at $13,531 a metric ton. Aluminum slipped 1% as other base metals declined.
–With assistance from Jack Ryan and Martin Ritchie.
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