Copper prices climbed to their highest level in over a month, with benchmark copper on the London Metal Exchange moving higher to around $13,100 a tonne after briefly touching its strongest level in over a month. According to The Economic Times, on the Shanghai Futures Exchange, the most-active contract also gained sharply, crossing 101,000 yuan per tonne, supported by firm domestic demand and improving risk appetite. The uptick comes as investors respond to signals that diplomatic channels between Washington and Tehran may reopen, even as geopolitical tensions in the Strait of Hormuz persist. While the situation remains fluid, the possibility of talks has helped ease some concerns around prolonged disruption to global trade and energy supplies. Industrial metals have seen sharp swings since the escalation of conflict in West Asia earlier this year, with prices initially coming under pressure due to fears of rising energy costs and slowing economic activity, but recovering on expectations that the situation may stabilise over time.
Market support came from strong demand indicators in China, where copper inventories in warehouses monitored by SHFE fell 11.5% this week, having slid 37% since March 9. As reported by The Economic Times, the Yangshan copper premium, which reflects demand for copper imported into China, jumped to $73 a ton, its strongest level since June last year. This represents a significant improvement in Chinese demand fundamentals that is supporting copper prices despite other market concerns. According to The Economic Times, import demand in China has remained strong, with the Yangshan copper premium rising sharply, indicating robust appetite from the world's largest consumer. The busiest copper contract on the Shanghai Futures Exchange rose 0.6% to close at 98,440 yuan (14,409.72) a ton and ended the week with a gain of 2.1%.
Despite positive Chinese demand signals, copper prices remained under pressure from geopolitical tensions and emerging inflation concerns. According to The Economic Times, investors were cautious as a fragile two-week ceasefire agreement between the U.S., Iran and other countries showed signs of strain on Friday, a day before they were to negotiate in Pakistan. The situation has now intensified with China's factory-gate inflation turning positive for the first time in over three years, as the producer price index (PPI) increased 0.5% year-on-year in March, ending a 41-month streak of declines. As reported by The Economic Times, copper, a key input in construction, power and manufacturing, has also drawn support from cost pressures across the supply chain. Major producers such as Codelco and Antofagasta have flagged higher fuel and input costs, reflecting the impact of elevated energy prices. Economists warn that inflation driven by higher input costs rather than stronger demand could squeeze company margins, slow growth and limit Beijing's policy options.
Additional support has come from tightening supply conditions, with concerns over sulphuric acid availability, a critical component in copper processing, intensifying after reports that China may curb exports in the coming months. According to The Economic Times, the copper price rose to its highest level since December 2013 despite a new increase in LME stocks, with Goldman Sachs raising its forecast for a surplus on the global copper market this year from 380,000 to 490,000 tons. From a technical perspective, copper prices are showing mixed signals with key resistance at $12,800 based on a retracement from February to March and the 50-day moving average. Hansen from Saxo Bank added that the major technical resistance on the upside is at $12,800. The market is navigating between these two competing elements - improved Chinese demand fundamentals against ongoing geopolitical uncertainties in the Middle East.
Other metals showed varied performance with LME aluminium extending gains after supply disruptions linked to the Middle East, a region that accounts for roughly 9% of global output. According to The Economic Times, LME zinc dropped 0.7% to $3,305 a ton and lead slipped 0.3% to $1,927, while nickel gained 0.7% to $17,205 and tin rose 0.8% to $48,050. The aluminium price spiked after metal was unable to travel its normal route through the Strait of Hormuz from Gulf producers to export markets, with Emirates Global Aluminium announcing that it could take up to one year to fully restore production at its Al Taweelah Smelter. Nickel prices surged on changes in Indonesia's pricing framework, while zinc, tin and lead also moved higher across both London and Shanghai markets.
