(April 8): Copper rose to a three-week high after the US and Iran agreed to a temporary ceasefire and reopening of the Strait of Hormuz, easing concerns over inflation and a global economic slowdown.
The industrial metal advanced as much as 3.5% to US$12,741 a tonne on the London Metal Exchange as global markets rediscovered an appetite for risk. Aluminium, the base metal most directly affected by supply concerns during the conflict in the Middle East, traded in a tight range.
A two-week ceasefire was reached less than two hours before US President Donald Trump’s deadline for attacking Iranian power plants and bridges. Oil at one point was heading for its biggest daily drop in six years and stocks surged while the pause in fighting brightened the demand outlook for metals.
Risk appetite has rebounded, resulting in an increase in base metals positions on Wednesday, said Gao Yin, an analyst at Shuohe Asset Management Co. However, given the temporary nature of the ceasefire, metals markets will struggle to return to the liquidity-driven rally seen at the start of the year, she said.
From a supply perspective, the ability of ships to transit Hormuz — the maritime chokepoint that links the Persian Gulf to global markets — is particularly important for aluminium. The Middle East accounts for roughly a 10th of the world’s output of the metal, and shipments have been affected by the near-closure of the waterway as well as Iranian strikes on facilities run by Aluminium Bahrain BSC and Emirates Global Aluminium PJSC.
Copper on the LME advanced 3.1% to US$12,693 a tonne at 9.46am in London while aluminium dipped 0.3% to US$3,466 a tonne. Other base metals on the exchange gained.
See also: Iron ore slides after incoming BHP chief seen in Beijing
Meanwhile, Singapore iron ore futures fell 1.1% to US$105.5 a tonne.
Uploaded by Arion Yeow
