Metals Daily

This Morning The LME complex opens softer this Tuesday morning, with all six base metals trading at or below Friday's official close (Monday saw no LME settlement due to the UK early May bank holiday). Tin leads the declines, trading around $48,785 at 06:05, down 1.0% from Friday's close of $49,264. Copper is at $12,828, off 0.7%, while zinc has shed 0.7% to $3,311. Aluminium is 0.4% lower at $3,570, nickel has dipped 0.3% to $19,123, and lead is essentially flat at $1,943. The broad weakness reflects a firmer dollar, elevated oil prices above $100/bbl, and thin liquidity with Shanghai, Tokyo and London all closed at various points over the long weekend. Macro & Geopolitics The Strait of Hormuz dominated headlines over the weekend. Iran hit several ships and set a UAE oil port ablaze after President Trump ordered the U.S. Navy to force the strait open, provoking the war's biggest escalation since the ceasefire four weeks ago. Brent settled at $114.44 on Friday, up 5.8%. The oil shock is reshaping rate expectations across the board: markets no longer price any Fed cuts this year, and have begun pricing ECB and Bank of England hikes. Barclays joined the growing consensus forecasting no Fed easing in 2026. Eurozone inflation hit 3.0% in April — well above the ECB's 2% target — while Q1 GDP growth slowed to just 0.1%. Trump's announcement of a 25% tariff on European car imports, up from the previously agreed 15%, added further pressure on European industrial sentiment. Friday's U.S. April payrolls report will be the week's key data point. Base Metals Copper hit a three-week low in early Tuesday trading, pressured by the stronger dollar and risk-off sentiment as Middle East hostilities intensified. Marex analyst Edward Meir noted that equities being down and the dollar firming on safe-haven flows were weighing on the complex. Liquidity remains thin with Shanghai closed for the Labour Day holiday until Wednesday, removing a key source of price discovery and physical demand signals. Chile's mining sector contracted 6.5% year-on-year in March, a potential supply-side support factor for copper. On the aluminium front, Century Aluminum's earlier-than-expected restart of its Iceland smelter may help ease tightness in European supply. China's sulfuric acid export ban continues to threaten Chilean copper output, while Indonesia's nickel sector awaits clarity on 2026 production quotas after PT Vale Indonesia halted mining activity. Precious Metals Gold rebounded modestly in Asian trade on Tuesday, up 0.2% to around $4,529 after falling more than 2% on Friday to its lowest since late March. The metal remains caught between its traditional safe-haven role and the headwind of rising real yields — with oil above $100 stoking inflation fears and pushing rate-hike expectations higher. TD Securities' Bart Melek sees strong support around $4,200 but warns that possible rate hikes could push traders to exit positions near-term. Silver fell 3.2% on Friday to $72.95, platinum lost 1.7% to $1,956, and palladium shed 2.9% to $1,481. Steel Iran has suspended exports of steel slabs and flat-rolled products until May 30, after U.S.-Israeli airstrikes damaged key facilities including Mobarakeh Steel and Khuzestan Steel. Roughly 10 million tonnes of annual capacity — 25–30% of Iran's total output — has been knocked offline. For European buyers, the direct impact is limited given the EU's existing ban on Iranian steel trade, but the removal of Iranian semi-finished material from Middle Eastern and Asian markets could tighten global slab supply and support regional pricing. EU stainless steel alloy surcharges for May have risen again, with grade 304 up 1.2% and grade 430 up 3.3%, driven by higher nickel and ferrochrome costs. Trump's 25% auto tariff on European vehicles adds further cost pressure across the steel-consuming automotive chain. Rare Earth Metals China's MIIT has published draft enforcement rules that would impose fines of up to five times "illegal gains" for rare earth producers breaching production quotas, with business licences revocable for overproduction exceeding 30%. The move reinforces Beijing's tightening grip on strategic mineral supply. Meanwhile, the U.S. plans to announce Norway as the 15th member of "Pax Silica," a consortium aimed at countering China's dominance in critical minerals, technology and AI. Almonty Industries' Western Star subsidiary has filed with the U.S. Defense Industrial Base Consortium as tungsten prices surge and Western buyers scramble for non-China supply. Forex The euro traded around $1.17 on Friday, slipping 0.2% as the dollar strengthened on safe-haven demand amid the Strait of Hormuz escalation. ECB hawkishness is building: President Lagarde confirmed a rate hike was discussed at last week's meeting, and Bundesbank chief Nagel warned tightening could come as early as June. Markets now price roughly 75 basis points of ECB hikes by year-end. Sterling weakened to $1.3532. The yen remains volatile, touching 155.7 before settling near 157 per dollar, with traders on intervention watch after Tokyo's suspected $35 billion intervention last week. The dollar index rose 0.3% to 98.44. Watch Today U.S. ISM Services PMI for April (due 16:00 CET) and March trade data will be closely watched for signs of economic softening. ECB President Lagarde and board member Philip Lane are both scheduled to speak — any hawkish signals could move the euro and European rate expectations. The Reserve Bank of Australia is expected to hike rates later today. AMD and Pfizer report earnings after the U.S. close.