Copper stabilises on firmer demand, talk of Iran ceasefire

LONDON: Copper prices rose on Wednesday after reports the US was seeking a ceasefire in the Iran war and due to firmer Chinese demand, but the market was wary after Tehran denied there were any negotiations.

Benchmark three-month copper on the London Metal Exchange climbed 1.1percent to USD12,234 per metric ton in official open-outcry trading, having slipped 0.6percent the previous session. “Copper seems like it’s stabilising, but we are potentially approaching the beginning of the end of the war, certainly not the end because it takes two to tango,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Israel and Iran exchanged airstrikes on Wednesday as Iran’s military rejected President Donald Trump’s assertion the US was in negotiations to end the war. Signs of improved physical demand in top metals consumer China also supported prices. “Now we are seeing some pent-up demand coming back at these lower prices and that will obviously also help to stabilize and over time underpin prices,” Hansen added.

“The upside technical level of USD12,500 seems to be an area where the next battle could be played out.” High prices for LME copper, which hit a record peak of USD14,527 a ton in late January, dampened demand, but prices slumped after Israel and the US attacked Iran on worries the war would hit global growth and metals consumption. Firmer demand was highlighted in the Yangshan copper premium, a gauge of China’s appetite for importing copper, which surged by 33percent to USD69 a ton on Wednesday, the strongest since June last year. Nickel was the strongest performer, advancing 3.4percent in official activity to USD17,525 a ton after top producer Indonesia said a windfall tax on the metal could go into force on April 1.

Aluminium was the only LME metal in negative territory, easing 0.5percent to USD3,245 a ton.

The lightweight metal used in transport, packaging and construction had rallied after the start of the war over supply worries since the Gulf is a major producer, but a potential end of the conflict could ease those concerns. Among other metals, LME zinc added 0.5percent to USD3,058 a ton, lead gained 1.3percent to USD1,917 and tin climbed 2.3percent to USD45,250.