Metals Daily

This Morning LME base metals are trading mixed this Tuesday morning as the escalating Middle East conflict reshapes risk sentiment. Copper is trading at $13,147.50, up 0.87% from Monday's official close of $13,033.99. Aluminium is essentially flat at $3,187.00 versus Monday's close of $3,184.21 (+0.1%), holding gains after yesterday's surge. Nickel is the standout mover, up 1.8% at $17,250 from $16,938.43. Zinc is marginally firmer at $3,304.50 (+0.2%), while lead edges up 1.0% to $1,934. Tin is the notable laggard, trading at $50,800 — down 5.4% from Monday's close of $53,685 — as supply-side developments in Myanmar ease the tightness narrative that had driven its recent rally. Macro & Geopolitics The widening U.S.-Israeli air war against Iran dominates all markets this morning. Iran's Revolutionary Guards declared the Strait of Hormuz closed and threatened to fire on any vessel attempting transit — a move that threatens roughly a fifth of global oil flows. Brent crude has risen for a third consecutive day, up 2.5% to ~$79.64, after Monday's 6.7% surge. European benchmark LNG prices leapt around 40% on Monday after Qatar halted production. The energy shock is stoking inflation fears: U.S. ISM data already showed factory gate prices at a near 3½-year high. Fed funds futures now price a 97.5% chance of no rate change on March 18. The dollar index is holding near six-week highs around 98.5, supported by safe-haven demand and the U.S.'s status as a net energy exporter. European equities are set to open lower, with DAX futures down 1% and FTSE futures off 0.3%. Base Metals Aluminium remains the focal point. Monday's spike to a one-month high of $3,254/t reflected fears that Middle Eastern smelters — accounting for ~8% of global output — could see both exports blocked and raw material imports frozen. Kpler data shows only 15% of alumina cargoes bound for the region have entered the Gulf. Goldman Sachs warned that if disruptions persist for a month, prices could temporarily justify $3,600/t, roughly $400 above spot. The bank sees substantial upside to European aluminium premiums, which had already jumped to $378/t last week. Global producers have paused Q2 premium offers to Japanese buyers pending clarity. Meanwhile, Alba has entered exclusive talks to acquire Europe's largest smelter, Aluminium Dunkerque, in a deal valued above €1 billion. Tin reversed sharply as Myanmar's Wa State steps up efforts to resume mine production, with exports of tin concentrates to China expected to rise through 2026. Copper showed divergence between Shanghai (down ~1%) and London (up ~1%), with the stronger dollar weighing on sentiment even as Hudbay Minerals announced a $1.48 billion deal to acquire Arizona Sonoran Copper. Precious Metals Gold rose for a fifth consecutive session, trading around $5,363/oz as safe-haven demand intensifies. Spot gold hit a four-week high on Monday before profit-taking trimmed gains. Physical gold flows through Dubai are severely disrupted as airlines cancel flights. Silver has been volatile, falling over 5% on Monday before recovering to ~$86–90 range. Platinum dropped over 3% to $2,228 and palladium gained 1% to ~$1,785. Analysts note that gold would be trading even higher were it not for dollar strength, with inflation fears from surging oil prices keeping the bid firmly in place. Steel Chinese steel exporters have stopped making offers to Middle East customers as the Strait of Hormuz closure chokes shipping. The Gulf had become China's second-largest steel export market, absorbing ~16% of shipments last year as other countries erected trade barriers. Analysts at Shanghai Metals Market warn that a short-term plunge in Middle East-bound exports will aggravate domestic supply pressure and push Chinese steel prices lower. Shanghai steel benchmarks lost ground on Tuesday, with rebar, wire rod and hot-rolled coil all declining. Production curbs ahead of China's annual parliamentary meeting starting March 5 add further downward pressure. Rare Earth Metals China's upcoming five-year plan, to be unveiled at the parliamentary meeting starting Thursday, could signal new policies on rare earths and critical minerals. Beijing leveraged its rare earth dominance to secure a trade truce with Washington last year, and analysts are watching for clues on domestic production targets, stockpiling initiatives, and scrap sector consolidation. Separately, Rio Tinto secured C$18.95 million from Canada to advance a gallium pilot plant in Saguenay, expected operational by 2027, with potential to scale to 40 tonnes annually — about 5% of global output — as the West races to reduce dependence on Chinese supply. Forex The dollar is the dominant force in currency markets, holding near six-week highs as the Iran conflict reinforces its safe-haven appeal. The euro fell around 1% on Monday to $1.1694, pressured by Europe's heavy reliance on energy imports. Sterling slipped 0.66% to $1.3395. The Swiss franc also weakened despite its traditional safe-haven status, with the SNB warning it was prepared to intervene against "excessive" appreciation — the euro hit its lowest against the franc since 2015 before recovering. For European scrap traders, the weaker euro against the dollar makes dollar-denominated metals more expensive, adding to cost pressures alongside surging freight and energy prices. Watch Today The Eurozone February HICP flash inflation reading is due at 10:00 CET — a hot print would compound the energy-driven inflation narrative and could shift ECB rate expectations. UK Chancellor Rachel Reeves is set to announce new economic forecasts in a budget update. Three Fed speakers are scheduled (Williams, Schmid, Kashkari), and markets will parse their comments for any reaction to the Middle East energy shock.