Background on Key Figures and Context
The ongoing air conflict between Israel and Iran has caused market uncertainty, affecting global growth and the demand for industrial metals. This situation has led to a drop in copper prices, while aluminum saw an increase in London.
Donald Trump, the former U.S. President, initiated an investigation in February to explore potential tariffs on copper imports, aiming to bolster U.S. production. This investigation has resulted in a premium for copper futures COMEX compared to LME contracts, which traders and producers have capitalized on by redirecting copper supplies from other markets to the U.S.
Impact on Metal Prices
On Tuesday, copper prices fell by 0.3% to reach $9,677 per metric tonne by 1634 GMT on the London Metal Exchange (LME).
Global stock markets declined, while oil prices rose due to fears of a broader regional conflict sparked by the Israel-Iran standoff. The rising oil prices have dampened global economic growth and intensified inflationary pressures.
“Another war has erupted, causing concern among investors, increasing long-term growth worries, and prompting a shift away from cyclical assets like base metals towards safe-haven assets,” explained Tom Price, an analyst at Panmure Liberum.
The U.S. dollar’s strength further weighed on the market sentiment, as metals are priced in dollars. This made dollar-denominated commodities more expensive for buyers using other currencies.
Citi anticipates that copper prices will drop to $8,800 in the third quarter of 2025 if the U.S. imposes tariffs on copper imports.
Performance of Other Base Metals
- Aluminum on the LME increased by 1.5% to $2,552 per tonne;
- Zinc fell by 0.7% to $2,640;
- Nickel decreased by 0.4% to $15,015;
- Tin dropped by 0.5% to $32,450;
- Lead descended by 1.3% to $1,982.
Key Questions and Answers
- What is the current situation causing the fluctuation in metal prices? The ongoing air conflict between Israel and Iran has increased market uncertainty, affecting global growth and the demand for industrial metals.
- Who initiated an investigation into potential tariffs on copper imports? Former U.S. President Donald Trump ordered the investigation in February to explore possible tariffs on copper imports, aiming to strengthen U.S. production.
- How have other base metals performed amidst this situation? Among other base metals, aluminum rose by 1.5% on the LME, while zinc fell by 0.7%, nickel decreased by 0.4%, tin dropped by 0.5%, and lead descended by 1.3%.
