Copper prices reached a six-week high as traders focused on potential peace negotiations between the US and Iran. According to Bloomberg, the US and Iran are considering extending their ceasefire that ends on Tuesday by another two weeks to allow more time for negotiations. US President Donald Trump announced on Tuesday that talks to end the Iran War could resume in Pakistan within the next two days after the weekend's collapsed negotiations led Washington to impose an Iranian port blockade. Mediators are trying to set up technical talks to resolve contentious issues, including reopening the Strait of Hormuz and Iran's nuclear enrichment programs. As per TradingView News, the three-month copper contract on the London Metal Exchange was at $13,273.63 per ton, largely unchanged from the previous close, while aluminium was 0.3% lower at $3,575 per ton. ANZ Research analysts noted that the prospect of U.S.-Iran peace talks has boosted market sentiment and broadened risk appetite among traders, propelling the metal to a one-month high.
Most base metals have experienced significant volatility since the conflict erupted, with prices initially falling due to concerns over supply chain disruption and slowing economic growth. According to TradingView News, Neil Welsh, head of metals at Britannia Global Markets, noted that 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, reinforced by reports that Washington and Tehran are looking to arrange a second round of talks in the coming days. Chinese demand signs have also provided additional support to the market.
Chinese fabricators have increased purchases after domestic copper prices fell below 100,000 yuan a ton in recent weeks due to the war, leading to significant drawdown in domestic inventories. According to Bloomberg, analyst Fan Rui from Guoyuan Futures Co. noted that copper's recovery is driven by restocking in China and dissipating inflation concerns amid peace talks, stating "The worst is over." The Yangshan Copper Premium, which measures China's appetite to import copper, has risen 270% to $74 per ton since the end of January, reaching its highest level since June of last year. A researcher at state-owned China Minmetals Corp. stated that refined copper consumption could increase by 3.7% annually on average over the next decade. ANZ Research also attributed copper's gains to encouraging commodity trade data out of China, with copper ore and concentrate imports rising almost 7% year-on-year.
Copper reached a six-week high of $13,392.5 per metric ton on the London Metal Exchange, with the Shanghai Futures Exchange's most traded copper contract closing up 1.38% to 102,090 Yuan ($14.974.70) per metric ton. However, as per TradingView News, copper initially extended its gains, recovering from losses incurred during the more than six-week Middle East conflict, due to speculation among traders about potential peace talks between the US and Iran. The rally has seen the market pushing firmly back above the bull trend line with price now testing the 6.1090 resistance level. Momentum studies remain bullish here, suggesting risks of a fresh break higher while price holds above the 5.8550 level and bull trend line. Above 6.2845 is the next bull target ahead of record highs around 6.5830.
Despite near-term economic impacts from the energy crisis, the sharp shock could prove beneficial for copper's long-term growth as economies pivot toward electrification. Trafigura Group analyst Henry Van stated that all trends pushing copper higher will be supercharged, with increased incentive for electrification and energy consumption insulation from geopolitical shocks. Speaking at an industry conference in Santiago on Tuesday, Van argued that this shock will ultimately accelerate the metal's long-term growth as economies increasingly shift towards electrification. He characterized the disruption stemming from the war in the Middle East as one of the most serious energy crises in decades, noting that the crisis's impact will differ regionally, with China being relatively better protected than most economies due to its substantial investment in electrification and lower dependence on oil and natural gas within its energy portfolio.
