Copper Prices Remain Near Record High as US Rebuffs Iran's Proposed Peace Initiative

Copper Prices Steady Near Record High Amid Ongoing Middle East Tensions

US President Donald Trump's comments on the Iran peace deal have underscored the deadlock in the Middle East conflict, which has been ongoing for 10 weeks and poses a threat to widespread economic disruption. Despite the uncertainty, metals have seen strong gains in the past month, with copper posting a significant advance on Monday.

As of 11:47 a.m. Shanghai time, copper was little changed at $13,938 a ton, after earlier losing as much as 0.8%. The metal had risen 2.7% on Monday. Aluminum was down 0.7%, while zinc, which closed at a three-year high, remained steady.

The metals market has largely shrugged off the deepening uncertainty surrounding the impasse in the Strait of Hormuz, where blockades imposed by Iran and the US have cut off oil and gas flows and driven up global energy costs. Strong demand from China has been a key factor in the resilience of copper prices, with analysts from Citigroup Inc. to Jefferies arguing that the metal will prove relatively resilient.

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RBC Capital Markets analyst Sam Crittenden noted that the extent of Chinese willingness to absorb higher prices remains a key question, with recent data indicating strong fundamental demand. The rallies across copper and zinc, as well as silver, on Monday were partly driven by speculation about fuel availability in Peru, a major mining hub.

The government in Lima has announced a $2 billion package to shore up state-owned refinery PetroPeru, but analysts have downplayed the impact on miners that depend on diesel supplies. "The PetroPeru news is just a financial arrangement and has not had any effect on mines," said Zijie Wu, an analyst at Jinrui Futures Co. "Peru's issue is not that they cannot get oil but they don’t have money to buy oil, so as the Middle East crisis develops, it can still cause some supply-side concerns."

Peru is a major producer of silver, and spot prices for the precious metal climbed 7% on Monday to close at $86.057 an ounce.

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