Written Commentary
BASE METALS
Copper: Copper prices moved closer to January highs on the LME as bullish technical signals and supply worries supported prices. Benchmark three-month copper on the London Metal Exchange gained 0.8% to $14,138. LME copper posted a record close on Tuesday; the LME’s six base metal index also closed Tuesday at a record high, with copper hitting $14,527 during trading. Future demand expectations, largely thanks to recent strong factory activity and expectations of AI infrastructure buildout, have eased concerns over immediate effects on global economies from higher energy prices. Meanwhile, continued worries over sulphuric acid shortages affecting copper producers also remains supportive of prices. Still, fading hopes of a peace deal in the near future between the US and Iran would otherwise create a challenging environment for copper, as elevated energy prices could dampen economic growth and demand for the metal. The Yangshan copper premium, a gauge of China’s appetite for importing copper, rose 3% to $72 a ton, highest since mid-April, suggesting strong demand in the top metals consumer despite rising prices.
US copper futures are up 2.17% to $6.6725. Speculation of further tariffs on US copper later in the year have supported arbitrage and defensive purchasing to the US. COMEX copper is trading at a premium of about $500 a ton over LME prices. The Trump administration expected to decide in July whether to impose tariffs on refined copper. This has also partly insulated it from some global risk-off pressures in recent weeks. COMEX inventories have climbed to successive record highs, reaching over 558,000 metric tons, more than doubling over the past eight months. As for the broader copper complex, increased risk sentiment will prove supportive of prices, while a formal peace agreement is likely to see investors adopt pre-war themes.
Freeports’ Grasberg mine in Indonesia is facing delays in returning to production. Freeport announced they are targeting a return to full production at Grasberg by early 2028 after initially expecting the mine to return to full production capacity by the end of 2027. Meanwhile, in China, coppers prices on the SHFE closed 2.1% higher at $15,528. There is also speculation that China’s refined copper imports could rise this quarter, helping support prices.
Zinc: Zinc rose 0.1% to $3,535.
Aluminum: Aluminum rose 2.4% to $3,649.
Tin: Tin gained 1.7% to $55,750.
Lead: Lead was last up 0.4% at $2,004.
Nickel: Nickel added 1.5% to $19,235. Reuters reported that Chinese companies operating in Indonesia warned that tighter ore quotas and local tax hikes threaten investment.
PRECIOUS METALS
Gold: June COMEX contracts held relatively steady (up 0.20% to $4,695), even as inflation concerns continue to weigh on Fed easing prospects, reinforcing a challenging macro-environment for gold. April’s PPI and CPI reports saw increasing inflationary pressures on both consumers and producers. Money markets are now more favorable to rate hikes than cuts in the coming months, albeit the prospects of a hike from the Fed remain marginal. Recent optimism that a US-Iran resolution would take place soon has waned; the US is reportedly weighing limited strikes against Iran in an effort to break the negotiation stalemate after President Trump called Iran’s counteroffer a “piece of garbage.” Those dynamics are likely to favor higher yields and a stronger dollar, while also reinforcing the Fed’s current stance, creating a challenging environment for gold in the near future. Still, any credible news regarding a reopening of the Strait is likely to pressure inflation concerns and lift gold. Elsewhere, India raised tariffs on gold and silver to 15% from 6%, in an effort to ease pressure on its foreign exchange reserves. India is the world’s second-largest consumer of precious metals.
Silver: Silver futures are up 2% to $87.38.
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