Copper falls, aluminum rises as conflict keeps traders on edge

Copper declined in a mixed trading session for metals as investors closely monitored uncertainties surrounding negotiations between the United States and Iran aimed at ending the conflict. Meanwhile, aluminum prices increased, as the prolonged conflict heightened the risk of supply disruptions in the Middle East.

U.S. President Donald Trump sent mixed signals regarding the prospects that negotiations with Iran could bring an end to the nearly month-long war, further stirring volatility in global energy markets. The conflict, now approaching the one-month mark, has raised concerns about inflationary pressures and a slowdown in global industrial activity, thereby weakening the outlook for metals demand.

Aluminum prices rose 0.8% on the London Metal Exchange, as traders weighed weakening demand conditions against the risk of supply disruptions should the Strait of Hormuz remain closed for an extended period — a scenario that has already forced some producers to curtail output. The lack of clarity over the direction and duration of the conflict has prompted many traders to stay on the sidelines.

“I have exited positions in base metals futures,” said Aces Zhou, a trader at KS Commodities Ltd., based in Shanghai.

“At the current price level, I prefer to wait for the geopolitical situation to settle before looking for another trading theme.”

Nevertheless, investors continue to monitor a recovery in demand in China after copper prices fell about 8% this month due to the impact of the conflict with Iran.

“The current price level would be quite attractive for some downstream fabricators to step in and buy,” Zhou noted, as China’s strong exports — particularly in power equipment — are supporting metals demand.

At the close, copper on the London Metal Exchange fell 1.4% to $12,147 per ton, while nickel declined 0.5%, trimming gains from the previous session after Indonesia, the world’s largest producer, approved export taxes on battery metals.

Meanwhile, zinc prices edged higher as the market assessed the impact of a larger-than-expected supply disruption at Boliden’s Garpenberg Mine in Sweden. Due to abnormal seismic activity, the company said the mine will operate at only 30% capacity until further notice.

​Source: Bloomberg News