Written Commentary
BASE METALS
Copper: Copper prices moved lower overnight though the metal is beginning to find some support amid the supply backdrop. Benchmark three-month copper on the London Metal Exchange fell 0.8% to $13,480. Several major Chinese copper smelters met with government officials overnight ahead of negotiations with global miners over processing fees. Processing/treatment fees have recently hit record lows amid a growing shortage of concentrate worldwide. Spot treatment charges for imported copper concentrate in China have been negative for more than 16 months. China’s major copper smelters agreed last November to cut concentrate-fed supply by more than 10% to counter overcapacity and the low fees, though output in Q1 grew by 9.3% and forward guidance from some leading smelters revealed no signs of a reduction in production.
Copper is also facing some near-term pressure following demand worries over weaker-than-expected data from China on Sunday night. China’s industrial production rose 4.1% YoY in April, down from 5.7% growth in March and below forecasts for 5.9%. The reading marked the slowest growth since July 2023. Still, supply risks persist and are broadly supportive of prices. Chile’s Q1 2026 copper production hit a nine-year low, down 6% year-over-year to just 1.22 million tons; Chile represents 25% of global supply. Production declines were concentrated at the world’s largest mines, suggesting the Grasberg-related problems are not isolated. Meanwhile, continued worries over sulphuric acid shortages affecting copper producers also remains supportive of prices.
Zinc: Zinc gained 0.1% to $3,527. An incident at Nexa Resources Cajamarquilla zinc smelter in Peru has put supply worries back into the picture. The smelter is responsible for producing around 344,400 tons of zinc per year and is the largest in Latin America. Supply worries have been a theme in the market for some time, with the International Lead and Zinc Study Group previously announcing there to be a 19,000 ton deficit this year.
Aluminum: Aluminum was up 1.2% at $3,611. The conflict in the Guld has removed roughly 4% of global aluminum supply, while damage to production facilities has exacerbated further supply worries.
Tin: Tin added 0.5% to $52,850.
Lead: Lead ceded 0.5% to $1,972.
Nickel: Nickel gained 2.3% to $18,990 as supply worries resurfaced over supplies from Indonesia. China’s Tsingshan Group asked smelters at its Weda Bay industrial park to divert power to aluminum production in favor of higher prices and better margins. Indonesia recently suspended nickel mining licenses for several companies after they failed to submit required documentation regarding their 2026 mining plans.
PRECIOUS METALS
Gold: June COMEX contracts are fell 0.8% to $4,520, as markets await the outcome of President Trump’s pause in strikes against Iran, which he announced yesterday afternoon. Trump explicitly stated the US can hold off only “another day or two”. A resumption of US strikes would spark further oil price gains, extend the inflation shock, and trigger a broad risk-off selloff amid the retaliatory strikes from Iran, while a deal or framework peace agreement would reverse the recent trends across equities, treasuries, metals, and currencies.
Expectations that the Fed will raise rates, materially higher yields, and a stronger dollar are creating a challenging environment for gains in the metal. Spiraling inflation concerns are prompting the aggressive selling rather than the classic flight-to-quality buying one would expect given the geopolitical backdrop. Recent trends have shown that gold is now positively correlated with equity performance. Still, structural support for gold remains intact with central bank purchasing expected to offer underlying support amid lower prices and elevated yields. Several large banks have trimmed their near-term price forecast for gold amid softer investor demand; JP Morgan cut its average price forecast to $5,243 from $5,708.
Silver: Silver futures are nearly 3% lower at $75.16.
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