Key Takeaways
- Copper prices declined as fighting between the U.S. and Iran escalated.
- Benchmark copper on the London Metal Exchange fell 0.72% to $13,387 a metric ton.
- Aluminium remained stable despite potential supply disruptions in the Middle East.
Copper prices have experienced a downturn following renewed tensions between the United States and Iran, with Tehran announcing the closure of the Strait of Hormuz once again. The conflict has led to a 0.72% drop in benchmark three-month copper on the London Metal Exchange (LME) to $13,387 per metric ton by 0300 GMT on Monday.
The situation has also affected other industrial metals, with zinc losing 0.71%, lead dropping 1.08%, nickel falling 1.02%, and tin slipping 0.24%. On the Shanghai Futures Exchange (SHFE), copper prices fell by 0.75% to 103,030 yuan per ton.
The escalation of hostilities between the U.S. and Iran has dampened risk appetite, reigniting concerns about higher energy prices and inflation levels that could lead policymakers to maintain interest rates at elevated levels for an extended period. This factor, combined with a strengthening U.S. dollar, which makes copper more expensive for buyers using other currencies, contributed to the decline in metal prices.
Despite the ongoing conflict, aluminium has shown resilience, largely shrugging off potential supply disruptions that could arise from the return of capacity following an interim peace deal after the initial outbreak of war on February 28. Emirates Global Aluminium reported the restart of its alumina refinery in the UAE, while visible aluminium stocks in LME-registered warehouses reached their lowest levels since 2022.
Notably, the share of available Russian-origin aluminium stocks in LME warehouses increased to 95% in June, according to exchange data. However, despite these supply concerns, consumers have sought alternative sources of material, mitigating some of the worst effects of the supply shortage. Other metals such as zinc and lead also experienced declines, with SHFE reporting a loss of 0.64% for zinc and 0.78% for lead.
The overall market sentiment remains cautious, with investors closely monitoring developments in the Middle East that could impact global energy prices and economic activity. The continued conflict has led to increased volatility in commodity markets, particularly those related to industrial metals like copper and aluminium.
