This isn’t one you can read off a chart so much as from the news. With talk of a possible US-Iran settlement, there is hope the Strait of Hormuz could be open for business again and some of the pressure on global growth would let up. Traders have been piling in on the metal and its shares, and the rally has made it clear how quickly risk premia can be put to bed.
Status of talks and why it matters
Donald Trump says the deal is done in all but name and could be put to paper by the weekend, though he offered no hard evidence. In Tehran, they’re not saying much, but some semi-official channels have put out a 14-point draft that envisions the Strait being unblocked, once the authorities give the nod.
Some are calling it an interim truce to put an end to the fighting and open a dialogue on Iran’s nuclear ambitions. You have to make of it what you will, but after three months of war, even the hint of de-escalation is enough to put a floor under growth and the metals that go with it.
Market snapshot: metals and momentum
By 12:10 in London, copper was 1.5% in the green at $13,690 a tonne on the LME. You see the same kind of thing with nickel and zinc, which were up 0.8% and 1.6% respectively as the market re-evaluated the macro picture.
The numbers were just as firm earlier. In Shanghai at 10:07 a.m., copper had already put on 1.2% to $13,864, with zinc and aluminium chipping in 0.7% and 0.3%. Tin was the star of the show, up over 3% after a record high or two this month.
Chinese miners lead equity reaction
The optimists in China have been having a good day. Zijin Mining in Hong Kong was up to 9.8%, CMOC Group more than 14%, and Jiangxi Copper 10.6%, all on a wave of trading volume.
Demand tailwinds, pricing risks
There is more to it than the headlines. You have structural demand to thank for a lot of the strength in copper, a must-have for AI, power and renewables. We’ve seen it trade above pre-war levels for some time now, and China’s appetite for it has been steady enough to prop up the price.
Jefferies put out a more bullish take on copper this week, but with a warning: a recession is still on the table. Then there is the matter of the White House and its yet-to-be-announced tariff plans, which is a variable that could rattle LME prices in the short term.
What to keep in mind today:
– De-escalation is being factored into the price of metals
– LME copper intraday at $13,690 a ton
– A volume-driven rally for the Chinese miners
– The tariff card is still up in the air
To put it in perspective, these metals have been holding their own. Aluminium is 13% higher since the supply lines were cut and some smelters in the Persian Gulf took a hit. Copper is up 4% or so since the US and Israel made their move on Iran in late February.
And don’t forget policy. Beijing has a five-year plan to put 2 trillion yuan into computing networks across the country, which is good for the kind of data and grid work that is heavy on copper.
Supply signals and the road ahead
Jia Zheng of Suzhou Chuangyuan Harmony-Win Capital Management thinks a calmer macro environment might bring us back to where we were earlier in the year. But she also points to falling stockpiles in China and strong orders from the factory floor as reasons for some near-term tightness.
It comes down to proof. We’ll be looking for a signed-off US-Iran accord, some movement on the Strait of Hormuz and a word on those US tariffs. Add in China’s push to digitise its infrastructure and you have the makings of whether this is a trend or just a blip.
