With the expectation of US-Iran talks resuming gradually increasing, copper prices continue to rise in the global metals market, holding near a six-week high. The main copper contract on the Shanghai Futures Exchange rose 1.38% to 102,090 yuan ($14,974.70) per ton, briefly touching 103,130 yuan, the highest level since March 3. Meanwhile, the London Metal Exchange (LME) three-month copper contract also slightly rose by 0.24%, reaching $13,317 per ton, and briefly surpassed $13,392.5, reaching the highest point since March 2.
The driver of this increase mainly stems from the expectation of possible US-Iran peace talks resuming. On Tuesday, US President Trump indicated discussions with Iran to end the war might restart this week. This news triggered a positive market reaction, resulting in a drop in oil prices, alleviating potential negative impacts from global economic recession and inflation pressures on metal demand. Given copper's extensive use in construction, electricity, and manufacturing, the market generally believes copper prices may receive support from the US-Iran talks, especially as the Middle East situation eases.
Optimistic Demand Outlook, China Supports Copper Price Rise
Aside from the upbeat sentiment in external markets, China, as the world's largest copper consumer, continues to significantly support copper prices. Although China's copper imports have declined, the market remains optimistic about the resurgence of Chinese demand. A researcher from China Minmetals Group mentioned on Tuesday that refined copper consumption in China is expected to grow at an average annual rate of 3.7% over the next decade. This growth forecast supports the market's bullish sentiment on copper prices.
Moreover, China's infrastructure construction and manufacturing recovery have positively influenced copper demand, particularly boosted by emerging industries like electric vehicles, renewable energy, and 5G technology, leading to an increase in copper usage. Although China's short-term copper import data is not ideal, the market generally believes that with China's economic recovery and rising domestic demand, copper consumption will further increase.
Concerns Arising from Supply Chain Issues and Suspension of Sulfuric Acid Exports
However, the market remains concerned about copper and nickel supply chain issues. On Wednesday, China announced plans to suspend sulfuric acid exports, sparking concern over potential impacts on the copper and nickel processing industries that rely on sulfuric acid. Sulfuric acid is an essential chemical in many metal smelting processes, especially crucial for copper and nickel processing. China's action may lead to further supply pressure on the global metals market, especially amid the current global economic and metal demand recovery.
Relatedly, nickel prices have also risen. Due to sulfur shortages, nickel processing companies in Indonesia have cut production by at least 10% since last month, exacerbating concerns over nickel supply. Shanghai nickel rose 2.51%, while London nickel increased by 0.65%. In addition, other metals like lead and tin also saw price increases supported by supply concerns.
Market Sentiment: Optimism over Middle East Situation Boosts Metal Demand
Besides copper and nickel, prices of metals such as lead, tin, and zinc also climbed in the tight supply-demand environment. Shanghai lead rose 0.36%, Shanghai tin surged 2.78%, and Shanghai zinc increased 0.27%. Although the gains in these metals are smaller than those in copper and nickel, they reflect the market's overall optimistic view on metal demand and supply.
In summary, although the rise in copper prices and other industrial metals faces some supply chain bottlenecks and market uncertainties, the expectation of US-Iran talks resuming and the support from the rebound in Chinese demand keep the market sentiment optimistic. As the global economy gradually recovers and the Middle East situation eases, demand for industrial metals is expected to grow further, providing momentum for continued metal price increases.
Future Prospects: Focus on Progress in US-Iran Talks and Recovery in Chinese Demand
With the expectation of US-Iran talks resuming, the upward momentum in copper prices and other industrial metals may continue. However, the market needs to closely monitor developments in the Iran issue, particularly whether the US and Iran can reach an effective peace agreement, and whether this agreement can have a profound impact on energy supply in the Middle East. Meanwhile, China's economic recovery and manufacturing revival remain key factors supporting metal prices.
In the long term, with the global economic recovery and the promotion of sustainable development, demand for industrial metals is expected to continue growing. For investors, keeping an eye on the metals market, especially the supply-demand relationships of key metals like copper and nickel, will be crucial for future market trend assessments.
