(March 25): Copper and most other metals rose as optimism around Washington’s diplomatic push to end the war in the Middle East boosted risk appetite.
The industrial metal climbed as much as 2% on the London Metal Exchange after US President Donald Trump said Iran had offered a “present” as a show of good faith in negotiations to end the conflict. However, Washington is moving more troops to the region, while Axios reported that the US and a group of regional mediators were still waiting for a response from Iran.
Trump’s comments were enough to push metals higher though, arresting a slide that’s been driven by worries the war will boost inflation and slow global economic growth. Copper is up around 3% so far this week, after falling about 11% over the previous three weeks.
“The progress of the war is very hard to gauge, and the news is mixed,” said Li Xuezhi, head of research at Chaos Ternary Futures. “As long as the war does not stop, the risk of a pullback in base metal prices remains. We are relatively cautious and choose to stay on the sidelines for now.”
Aluminum was the only metal that fell on the LME on Wednesday. The Middle East accounts for about 9% of production capacity for the lightweight metal, and the effective closure of the Strait of Hormuz has constrained shipments. Goldman Sachs Group Inc raised its second-quarter price forecast to US$3,200 a tonne from US$3,100, saying in a note that supply disruptions would be partially offset by weaker global demand.
Copper rose 1.2% to US$12,246 a tonne on the LME as of 11:03am in Shanghai. Zinc climbed 0.7%, while aluminum fell 0.6% to US$3,242.50. Iron ore dropped 2.4% to US$105.05 a tonne in Singapore.
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