Commerzbank’s Thu Lan Nguyen notes Copper prices are trading close to January’s intraday record despite renewed Iran–US tensions and higher Oil prices. Markets currently anticipate limited economic fallout as long as a Hormuz reopening deal is reached, but prolonged disruption could hurt growth. Additional support comes from slower Chinese Copper ore imports and potential supply constraints linked to sulfuric acid shortages.

Tight ore supply and risk balance

"However, the recovery seen in recent weeks across a wide range of financial markets (such as the stock market) has shown that the market currently fears only limited economic repercussions from the ongoing crisis in the Middle East."

"This is the case only if US and Iran leaders reach an agreement in the foreseeable future that allows for the opening of the Strait of Hormuz. The longer the blockade lasts, however, the more severe the impact on the global economy is likely to be, meaning that the risk of setbacks should not be underestimated."

"Apart from the Iran conflict, there has recently been some news supporting prices, such as the Chinese trade data for April. These showed a slowdown in copper ore imports, which could indicate less dynamic copper production in the medium term in the most important producing country."

"A factor here could be that the blockade of the Strait of Hormuz is also limiting the supply of sulfuric acid, which is needed in copper ore mining. This, in turn, could exacerbate the shortage of copper ore."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)