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Metal prices boosted by hope for US-Iran agreement

Metal prices boosted by hope for US-Iran agreement
Metal prices boosted by hope for US-Iran agreement

Prices of industrial metals rose on Monday due to optimism that the initial U.S. - Iran talks may pave a way for a peace deal. Benchmark copper on the London Metal Exchange traded 1.2% higher, at $13,760 per metric ton. The price of copper, which investors use as a measure of economic health, has increased by more than 15 percent since March 23. Mediators said that U.S. officials and Iranian officials had made "encouraging" progress in agreeing on a 60-day timeline to end the war. Toutefois, tensions?persisted?over Lebanon and the Strait of Hormuz?after Tehran once again closed the waterway?and?U.S. Donald Trump has threatened new attacks.

Tom Price, Panmure Liberum analyst, said: "The market desperately wants to believe that the U.S. - Iran?war has ended and is busy trying to price this in... but it's the truth that this ceasefire doesn't?look robust."

"We have definitely entered a period?where the markets are trying to revert to pre-war conditions. Investors are once again looking to the themes of pre-war copper." The copper prices have been driven up in recent years by the forecasts for strong growth of demand from data centres required for AI, grid investments and electric vehicles.

Aluminium prices are expected to be further pressured by the Middle East's 9% global smelting capability.

Aluminum prices have fallen 10% since early June, when fears of Middle East supply and global shortages peaked.

The LME cash contract premium over the 3-month forwards is decreasing, which shows that concerns are easing about the?aluminium supply. After?peaking at 19-year highs over $104 per ton on 1 June,?it's now around $10 per ton.

Reduced oil prices will reduce the production costs of aluminium and zinc. Both are energy-intensive metals. This, say traders, will weaken the price support, turning it into a negative factor. Aluminium rose 0.2% at $3,405 per ton. Zinc gained 1.5%, while lead firmed up 0.1%, reaching $1,956. Tin climbed 3.3%, to $55,050, and nickel rose by 1.2%, to $17.775.

(source: Reuters)