Aluminum Supply Fears Continue

BASE METALS

Copper: Copper prices are lower, with benchmark three-month copper on the LME down 1.1% at $12,997, as risk-sentiment was dented by expectations that the conflict in Iran will continue to drag out. Elsewhere, rising warehouse inventories are also pressuring prices. Copper inventories at the London Metal Exchange rose by 10,125 tons to 312,075 tons on Wednesday, the most since October 2024. Meanwhile, the large build in COMEX inventories seen last year, driven by concerns about potential US import tariffs, has stabilized, with stocks hovering around 545,000 tons.

Workers at a Glencore copper refinery in North Queensland plan to go on strike after nearly a year of failed negotiations over pay and working conditions, the Australian Workers’ Union said on Wednesday. The refinery is responsible for producing up to 300,000 tons of finished copper each year.

China’s unwrought copper imports fell in the first two months of 2026, according to China’s customs data on Tuesday, with still-high prices and the Lunar New Year break keeping demand for imported units sluggish. Copper imports declined by 16.1% year-over-year to 700,000 metric tons in the two months from January to February. During that time-frame, benchmark three-month copper on the LME rose 5.91% in January and 1.41% in February. The Yangshan copper premium, a gauge of China’s appetite for imported materials, dropped to $20 a ton in late January, the lowest since July 2024, though it picked up after the Lunar New Year break.

Zinc: Zinc slipped 0.6% to $3,326

Aluminum: Aluminum prices rose, with benchmark three-month aluminum on the LME up 1 % to $3,439 earlier in the morning. The conflict in Iran continues to pressure global supplies, lifting prices as shipping through the Strait of Hormuz has closed. Cancelled warrants or metal earmarked for delivery stood at 177,325, or 40% of the total on Tuesday, compared with 9% on February 27, before the turmoil in the Middle East started.

Production from Gulf countries has dropped following force majeures from several Mideast smelters. The Gulf region produced 8% of the world’s aluminum last year. Worries about supplies have flipped the discount for the cash aluminum contract over the three-month forward into a premium or backwardation.

Tin: Tin dropped 1.3% to $49,800.

Lead: Lead retreated 0.2% to $1,940.

Nickel: Nickel ceded 0.4% to $17,425.

PRECIOUS METALS

Gold: Gold prices are lower as a stronger dollar and higher Treasury yields in the wake of February’s inflation print pressure prices. April COMEX contracts are down 1.30% to $5,175. February’s CPI report showed inflation held steady at 2.4% before the Middle East conflict, with cooling core prices and slowing shelter inflation supporting the case for Fed easing later this year. However, the subsequent surge in energy prices introduces new upside risks to inflation that could delay the timing of rate cuts.

The bulk of February’s price pressures came from shelter, food, and energy components. Shelter rose 0.2% and remained the largest contributor to the monthly increase, while food prices climbed 0.4%. Energy prices also rose modestly by 0.6% during the month. From a policy perspective, the report likely does little to materially shift the Fed’s outlook. Core inflation continued to moderate modestly, supporting the case for eventual easing later this year. However, the recent rise in oil prices and the potential for energy-driven inflation may complicate the path for rate cuts, particularly if higher fuel costs begin feeding through into broader price pressures in coming months.

Crude oil is trading in the upper $80s, easing from Monday’s highs but remaining elevated enough to keep bond yields firm. Energy prices rose following reports that three vessels came under fire in the Strait of Hormuz Wednesday morning. Meanwhile, the US Navy denied it was escorting ships through the Strait, news that it was had briefly lifted markets on Tuesday. Higher yields increase the opportunity cost of holding non-yielding assets such as gold, limiting the metal’s upside despite ongoing geopolitical uncertainty.

Energy markets remain the primary driver of sentiment. The conflict in Iran has disrupted roughly one-fifth of global crude and natural gas supply as Tehran targets shipping in the Strait of Hormuz and attacks on regional energy infrastructure continue. Qatar’s energy minister warned that Gulf producers could shut down exports within weeks if the conflict escalates further, a scenario that could push oil toward $150 per barrel.

Silver: Silver futures are down 4.60% at $85.50.

Platinum: Platinum is down 2.00% to $2,192.

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