Copper leaps to three-week high on US-Iran ceasefire

Copper jumped to a three-week high on Wednesday after U.S. President Donald Trump agreed to a two-week ceasefire with Iran, easing fears of a global economic slowdown as a result of the Middle East conflict. Benchmark three-month copper on the London Metal Exchange was up 2.7% at $12,650 a metric ton in official open-outcry activity. It earlier rose as much as 3.6% to $12,755.50, its highest since March 18. Copper fell by 7.6% in March on economic fears sparked by the Iran war. The ceasefire is subject to Iran's agreement to pause its blockade of oil and gas passing through the Strait of Hormuz, Trump said. Brent crude oil prices fell as much as 16.1% on Wednesday. "While this (ceasefire) may lead to a near-term easing in the energy risk premium, the agreement appears fragile and conditional, suggesting markets are likely to remain headline-driven rather than shifting to a sustained risk-on backdrop," brokerage Sucden Financial said in a note on base metals. The cash LME copper contract's discount to the three-month forward widened to $98 a ton from $84.60 on Tuesday, implying there is no shortage of available metal. Copper stocks in LME-approved warehouses on April 7 stood at 385,275 tons, the highest since March 2018, after 10,075 tons of inflows to New Orleans and locations in Asia over the Easter break. Aluminium, prices of which had spiked when metal had been unable to take its normal route from Gulf producers to export markets through the Strait of Hormuz, eased 0.4% to $3,463 a ton. Smelters in the UAE and Bahrain were targeted and damaged by Iranian attacks late last month, taking supply out of the market. Iran's Mehr news agency, meanwhile, said reports of a U.S.-Israeli attack on the Arak aluminium plant in central Iran were incorrect. In a broad relief rally for base metals, nickel jumped 2.3% to $17,345 a ton, tin soared 4.3% to $47,950 and lead added 0.4% to $1,953, while zinc was flat at $3,307.