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Copper jumped to a three-week high on Wednesday after U.S. President Donald Trump agreed to a two-week ceasefire with Iran, easing fears of a global economic slowdown as a result of the Middle East conflict.
Benchmark three-month copper on the London Metal Exchange was up 3.5% at $12,737.50 a metric ton by 0920 GMT after touching its highest since March 18 at $12,755.50. Copper fell by 7.6% in March on economic fears sparked by the Iran war.
The ceasefire is subject to Iran's agreement to pause its blockade of oil and gas passing through the Strait of Hormuz, Trump said. Crude oil prices fell more than 16% on Wednesday.
"While this (ceasefire) may lead to a near-term easing in the energy risk premium, the agreement appears fragile and conditional, suggesting markets are likely to remain headline-driven rather than shifting to a sustained risk-on backdrop," brokerage Sucden Financial said in a note on base metals.
The cash LME copper contract's discount to the three-month forward widened to $89.50 a ton from $84.60 on Tuesday, implying there is no shortage of available metal.
Copper stocks in LME-approved warehouses on April 7 stood at 385,275 tons, up 10,075 tons from April 2 and the highest level since March 2018. The volume was boosted by inflows to New Orleans and locations in Asia.
Aluminium, prices of which had spiked when metal had been unable to take its normal route from Gulf producers to export markets through the Strait of Hormuz, was flat at $3,475 a ton.
Smelters in the UAE and Bahrain were targeted and damaged by Iranian attacks late last month, taking supply out of the market. Iran's Mehr news agency, meanwhile, said reports of a U.S.-Israeli attack on the Arak aluminium plant in central Iran were incorrect. In a broad relief rally for base metals, nickel jumped 2.6% to $17,385 a ton, tin soared 4.8% to $48,030 and lead added 0.6% to $1,957.50 while zinc gained 0.5% to $3,322.50.
(Reporting by Tom Daly Additional reporting by Noel John in Bengaluru Editing by David Goodman)
