Copper prices soar to a near two-week high while aluminum comes under pressure, metals market reacts with polarization to US-Iran agreement
- Boosted by news that the US and Iran are close to reaching a one-page ceasefire memorandum of understanding, the London Metal Exchange benchmark three-month copper rose 2.1% on Wednesday to $13,410 per ton during the official open outcry trading session, hitting an intraday high of $13,462—the highest since April 23—marking the third consecutive trading day of gains.
- Analysts at Sucden Financial pointed out that copper prices were very strong after the news of the US-Iran agreement, while oil prices fell and other markets rebounded. Brent crude oil futures plummeted 10%, dropping below $100 per barrel for the first time since April 22.
- The most active copper contract on the Shanghai Futures Exchange rose 1.6% to 102,660 yuan per ton after reopening post-Labor Day holiday. Montefusco stated that the metals market was also boosted by data showing accelerated expansion in China’s services sector in April, with stronger growth in new business.
- In contrast to copper’s performance, LME aluminum prices fell 1.3% in official trading to $3,544.50 per ton, as the market expects Middle Eastern supply disruptions to ease—the region accounts for about 9% of global aluminum production. Analysts at ANZ Bank expect aluminum prices to remain on the upside, traded above $3,400.
- From a trading psychology perspective, the divergence between copper and aluminum reflects different risk pricing logic for the two commodities. Copper benefits from the rebound in global risk appetite and improved demand expectations from China, the largest consumer, while aluminum is directly pressured by the fading of Middle Eastern supply premiums. ANZ Bank notes that if the Strait of Hormuz reopens, prices may briefly fall, but manufacturers’ restocking will limit the downside.
- Looking ahead, attention should be paid to the actual signing progress of the US-Iran memorandum and whether the pace of manufacturing restocking can offset the impact of the fading geopolitical premium.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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