Copper approaches record highs despite stalled Washington-Tehran talks

Copper prices surged at their fastest pace in more than a month, moving close to record highs as markets largely ignored the deadlock between the United States and Iran over ending the war and reopening the Strait of Hormuz.

All major metals contracts on the London Metal Exchange rose, after the exchange’s composite metals index closed Friday trading at a new record high. Base metals, from copper to zinc, continue to show notable strength amid signs that demand is outpacing supply.

Copper climbed 2.7% to settle at $13,943 per ton, marking the highest close in its history and surpassing the previous peak of $13,618 recorded on January 29.

Jia Zheng, trading director at China’s Harmony-Win Capital Management, said “the market has moved beyond the impact of the US-Iran war, and copper now has its own independent price trend,” pointing to tight supply conditions and declining inventories in China as the main supportive factors.

Industrial metals also received additional support from strong Chinese exports, with April exports rising 14% year-on-year, particularly clean technology exports that rely heavily on copper.

Citi analysts believe demand linked to the energy transition and defense industries, alongside supply constraints, will support copper prices even if the Strait of Hormuz remains closed for an extended period.

In other metals markets, aluminum rose more than 2%, while nickel gained 1.9%. The closure of Hormuz is affecting Gulf aluminum smelters and nickel producers that rely on sulfur supplies coming from the region.

Morgan Stanley analysts noted that aluminum could continue receiving support if the closure of the strait drags on, especially since restarting smelters requires long periods of time, potentially creating new buying opportunities in the market.