Written Commentary
BASE METALS
Copper: Benchmark three-month copper on the LME was up 0.7% at $13,140 as optimism about the possibility of US-Iran peace talks restarting and a weaker dollar were favorable to the metal. That said, the market remains highly headline driven. Any escalation in the conflict, renewed spikes in energy prices or signs of weaker demand could quickly undermine sentiment.
China’s copper smelters will likely press ahead with plans to trim output as Beijing’s ban on sulphuric acid exports tames a price rally in the byproduct that had offset falling processing fees, industry insiders and analysts said. Sulphuric acid prices had risen sharply on growing battery sector demand even before the start of the Iran war in late February, which disrupted commodity shipments through the Strait of Hormuz. At least three analysts and two copper processors told Reuters that smelters will have to trim output if prices of sulphuric acid slow their climb or fall while processing fees are still tumbling. Elsewhere, China’s copper concentrate imports continued to rise in the first quarter, the country’s official customs data showed on Tuesday, despite negative processing fees and a top smelter group’s vow to cut production this year.
The broader near-term macro case for copper appears bearish as elevated energy prices and supply chain risks weigh on the outlook for industrial demand and global growth, though a material end to the conflict has the opportunity to unwind these risks. While the ceasefire may lead to an easing in the energy risk premium – if both sides meet at the table once again, the agreement appears fragile and conditional, suggesting markets are likely to remain headline-driven rather than shifting to a sustained risk-on backdrop.
Zinc: Zinc rose 0.2% to $3,323.
Aluminum: Aluminum fell 1.2% to $3,565.
Tin: Tin was up 2.8% at $49,650.
Lead: Lead added 0.3% to $1,927.
Nickel: Nickel gained 1.4% to $17,945 a ton, its highest since February 27. Nickel processors in top supplier Indonesia trimmed output and the government revised the formula used to determine mineral reference prices.
PRECIOUS METALS
Gold: April COMEX contracts are up 1% to $4,815 alongside a drop in oil prices and renewed risk sentiment following an overnight Bloomberg report. Bloomberg reports Washington and Tehran are discussing another round of in-person negotiations before the ceasefire expires April 21. VP Vance said Monday the future of talks “rests with Tehran.” No date or location has been confirmed, but sources say the objective is to extend the ceasefire. Iran’s demands remain sanctions relief first; the US demands uranium stockpile surrender, nuclear dismantlement, and Hormuz reopening. Still, markets are unlikely to find durable footing until a material breakthrough in hostilities materializes. The focus remains firmly on developments in the Middle East and the prospects for a resolution. De-escalation could ultimately prove supportive for precious metals, particularly if it weighs on the dollar. March’s core CPI reading of 2.6% YoY confirms that energy-driven inflation has not yet penetrated underlying price pressures, though upside risks remain. We expect the Fed to maintain its easing bias and expect a rate cut later in the year.
Silver: Silver futures are up 3.36% to $78.19.
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