Copper prices fell as inventories tracked by the London Metal Exchange jumped to their highest levels in more than six years, while demand for the physical metal remains under pressure due to elevated prices.

Futures for the key industrial metal declined 0.9% during midday trading in London to trade near $12,740 per ton. Meanwhile, exchange inventories surged by about 19,000 tons to 330,375 tons, the highest level since September 2019.

The rapid buildup in exchange inventories since the beginning of the year reflects growing bearish sentiment in the physical copper market, as sellers struggle to offload shipments amid weakening demand in China, while the rush to ship metal to the United States ahead of potential tariffs has eased. Prices, which hit a record above $14,500 at the end of January and remain about 30% higher than last year, have also prompted many buyers to hold back.

In contrast, aluminum prices recovered after a two-day decline, as uncertainty over the duration of the war in Iran continues to fuel concerns about further potential production cuts at major plants across the region.

The near-total closure of the Strait of Hormuz has disrupted shipments of metals from smelters as well as the supply of raw materials to them. Several companies have already reduced output, while analysts warn that the risk of further shutdowns will increase if the conflict persists.

According to estimates by Chinese research firm Mysteel, producers in the region could cut up to an additional 500,000 tons of annual output if the closure of the strait lasts between one and two weeks.

Mysteel said that current aluminum prices do not adequately reflect the impact of supply cuts and rising costs on the industry, adding that previous price forecasts, which were based on a quick resolution of the conflict, are no longer valid.

In a separate development, a technical issue on Monday halted electronic trading across all contracts on the London Metal Exchange for more than two hours, preventing traders from placing orders in markets ranging from aluminum to zinc.

As of 10:52 local time, copper futures on the London Metal Exchange were trading at $12,750.50 per ton. Other metals showed mixed performance, with aluminum rising 0.8% while nickel fell 0.4%.

Bitcoin traded relatively steady near the $74,000 level on Tuesday, trimming gains after briefly approaching $76,000, as investors monitored oil price volatility linked to the war in the Middle East and awaited central bank decisions.

The world’s largest cryptocurrency posted a slight gain of 0.2% to $74,291.5 after touching $75,991.2 over the past 24 hours.

Support from short covering and fund inflows

Bitcoin received support from short covering, as traders closed bearish positions built during the sell-off in early February. However, momentum eased خلال the session, leaving the currency trading near broadly stable levels.

Renewed institutional demand and continued inflows into spot exchange-traded funds (ETFs) also supported prices.

Axel Rudolph, market analyst at IG, said that despite the recovery, Bitcoin’s path during March has not been entirely smooth, as each upward move faced selling pressure near previous resistance levels as traders took profits after rapid gains.

He added that this pattern has led to rallies followed by periods of consolidation, as the market searches for a clearer direction.

War in Iran and oil prices in focus

Geopolitical tensions remain a key focus for markets as the conflict between the United States, Israel, and Iran enters its third week, keeping risk appetite fragile across global markets.

Despite an overnight pullback, oil prices rose again on Tuesday to remain above $100 per barrel amid ongoing concerns about supply disruptions through the Strait of Hormuz.

Higher energy prices have reinforced concerns about persistent inflation, influencing investor positioning across asset classes, including cryptocurrencies.

Rudolph noted that while heightened global tensions initially triggered a sell-off in high-risk assets, digital currencies have since begun trading more like defensive assets as the situation evolves.

Focus on Federal Reserve decision

Investors are now awaiting the Federal Reserve’s upcoming monetary policy decision on Wednesday, with expectations widely pointing to no change in interest rates, while attention will focus on any signals regarding inflation risks.

This week also features a series of global central bank meetings, increasing market sensitivity to any developments in monetary policy.

Other cryptocurrency moves

Ethereum, the world’s second-largest cryptocurrency, rose 1.5% to $2,314.73.

Ripple, the third-largest cryptocurrency, also gained 3% to $1.53 amid volatile trading in the altcoin market.

Oil prices rose more than 1% on Tuesday, recovering part of the previous session’s losses after Iranian attacks on the United Arab Emirates reignited supply concerns, while the Strait of Hormuz remains largely closed.

Brent crude futures rose by $1.73, or 1.7%, to $101.94 per barrel as of 13:15 GMT, while US West Texas Intermediate crude rose by $1.23, or 1.3%, to $94.73 per barrel.

Prices had declined in the previous session, with Brent losing 2.8% and US crude falling 5.3% after some vessels passed through the vital Strait of Hormuz.

The war between the United States, Israel, and Iran has entered its third week with no signs of ending, as Iranian attacks on the UAE resumed. Oil loading operations at Fujairah port were partially halted on Tuesday after a third attack in four days caused a fire at the export terminal, while operations at the Shah gas field remain suspended following an earlier attack.

Fujairah port, located on the Gulf of Oman just outside the Strait of Hormuz, is a vital transit point for about 1% of global oil demand.

At the same time, disruptions to shipping through the Strait of Hormuz — a route for about 20% of global oil and liquefied natural gas trade — have intensified concerns over supply shortages, higher energy costs, and rising inflation.

Tony Sycamore, market analyst at IG, said in a note that risks remain elevated, as a single Iranian militia launching a missile or planting a mine in a passing tanker could reignite the situation entirely.

In the same context, several US allies rejected President Donald Trump’s call on Monday to send warships to escort shipping through the strait, drawing criticism from Trump, who accused Western partners of lacking appreciation after decades of support.

Kevin Hassett, White House economic adviser, told CNBC on Tuesday that oil tankers have begun gradually passing through the Strait of Hormuz, noting that the Trump administration expects the conflict to last weeks rather than months.

Although this has eased concerns about an immediate supply shock from the Middle East, investment bank Cavendish said traders still expect significant market disruptions.

Middle Eastern crude prices have surged to record levels, becoming the most expensive globally, amid claims from traders that the shortage of available deliverable supply is the main driver behind the rise.

Sources told Reuters that the effective closure of the Strait of Hormuz has forced the United Arab Emirates, the third-largest producer in OPEC, to cut its production by more than half.

Oil prices remain likely to rise further by the end of March, as OANDA analyst Kelvin Wong said technical analysis places the medium-term resistance level for West Texas Intermediate at $124 per barrel.

In an effort to curb rising energy costs, the head of the International Energy Agency suggested that member countries pump more oil in addition to the 400 million barrels previously agreed to be released from strategic reserves.

The US dollar edged lower on Tuesday as investors shifted their focus to central bank meetings amid uncertainty surrounding the war in the Middle East and oil price expectations.

Crude oil futures remained above the $100 per barrel level, supported by supply concerns as the Strait of Hormuz remains largely closed, despite a pullback in the previous session after some vessels passed through the vital waterway.

Mohit Kumar, economist at Jefferies, said that if Iran allows ships bound for India, China, and South Asia to pass, this could significantly ease supply pressures.

The US dollar index, which measures the currency against a basket of six major currencies, fell 0.10% to 99.75 points, after reaching 100.54 on Friday, its highest level since May 2025, as investors turned to safe-haven assets while currencies such as the euro and yen were more exposed to the impact of rising oil prices.

Bhanu Baweja, strategist at UBS, estimated that oil prices could reach $120 if the Strait of Hormuz remains closed until the end of March, and $150 if the closure continues until the end of April.

In an escalation of tensions, a senior Iranian official said the new Supreme Leader rejected de-escalation proposals conveyed by mediators, demanding that the United States and Israel be “subdued” first.

Market focus on central bank response

Investors are now questioning whether global economies are returning to conditions similar to 2022, when central banks launched an aggressive tightening cycle.

The US Federal Reserve is scheduled to announce its monetary policy decision on Wednesday, followed by the European Central Bank, the Bank of England, and the Bank of Japan the next day.

These banks are widely expected to keep interest rates unchanged, but investors will focus on any signals regarding how policymakers plan to deal with the impact of the war in the Middle East.

Antje Praefcke, currency analyst at Commerzbank, said she believes central banks will closely monitor inflation expectations as a lesson from the previous price shock, adding that they may move more quickly compared to the period following the coronavirus pandemic.

Market pricing currently suggests expectations of about two interest rate hikes by the European Central Bank in 2026, a major shift from earlier expectations that pointed to potential rate cuts. Expectations for Federal Reserve rate cuts have also been reduced, with markets now pricing only about a 25-basis-point cut this year.

Paul Mackel, head of global FX research at HSBC, said the situation is different from 2022 at the start of the Russia-Ukraine war, noting that the dollar was then supported by additional factors such as US monetary tightening and weak global growth, which are currently absent.

Major currency moves

The euro rose 0.1% to $1.1515 after falling to $1.1409 on Monday, its lowest level since August 2025. Mackel expects the euro/dollar pair to trade in a range between 1.10 and 1.12 if energy supply constraints in the Gulf persist.

In Germany, investor sentiment declined more than expected in March, recording its largest drop since February 2022.

The Japanese yen rose to 159.03 against the dollar, approaching the key 160 level despite verbal warnings from Japanese authorities, after falling more than 2% since the outbreak of the war at the end of February.

Bank of Japan Governor Kazuo Ueda said core inflation is accelerating toward the bank’s 2% target, stressing that price increases must be accompanied by strong wage growth.

Barclays analysts believe that continued high oil prices, a prolonged closure of the Strait of Hormuz, and an accommodative monetary stance by the Bank of Japan could push the dollar/yen pair to test the 160 level and then the intervention zone seen in 2024 around 161.

Japanese Finance Minister Satsuki Katayama confirmed that the government is ready to take decisive action to address volatility in foreign exchange and financial markets.

Meanwhile, the Australian dollar rose 0.2% to $0.7086 after the Reserve Bank of Australia raised interest rates in a closely split vote.