LONDON: Industrial metals prices rose on Monday, boosted by optimism that initial US-Iran talks could pave the way for a deal to end the war. Benchmark copper on the London Metal Exchange traded 1.2percent higher at USD13,760 a metric ton in official rings.
Prices of the metal, which is used by investors as a gauge of economic health, are up more than 15percent since March 23. US and Iranian officials made “encouraging progress”, agreeing a 60-day roadmap towards ending the war, mediators said. However, tensions persisted over Lebanon and the Strait of Hormuz after Tehran again shut the waterway and US President Donald Trump threatened fresh attacks.
“The market is desperate to believe that the US-Iran war is over and is busily trying to price that in … but the reality is that this ceasefire does not look robust,” said Panmure Liberum analyst Tom Price.
“We’ve definitely entered a phase where markets are trying to go back to something that resembles pre-war conditions. Investors are looking ahead again to pre-war themes around copper.” Copper prices over the past few years have been boosted by forecasts of strong demand growth from data centres needed for AI, grid investment and electric vehicles. Traders expect aluminium prices to come under further pressure on expectations of rising shipments from the Middle East, which houses 9percent of global smelting capacity.
Aluminium prices have dropped 10percent since early June when fears about Middle East supplies and global shortages peaked. Easing concerns about aluminium supplies can be seen in the narrowing premium for the LME cash contract over the three-month forwards. Having peaked at 19-year highs above USD104 a ton on June 1, it is now around USD10 a ton.