Base metal prices rose at the beginning of the week. The prospects of a trade agreement between the US and China provided the main boost, after reports that trade representatives had agreed on key points over the weekend. According to US Treasury Secretary Scott Bessent, this means that the threat of new punitive tariffs of 100% on Chinese imports is off the table, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Copper nears all-time high amid supply concerns

"Concerns about a new escalation of the conflict and the resulting consequences for growth of both economies have thus been dispelled for the time being, which is benefiting base metals. The substance of any agreement is likely to become clear only after the meeting between the two presidents on Thursday though. Details are not expected until then."

"With this tailwind, the Copper price is once again approaching its all-time high of $11,000 per ton. The improved demand outlook is currently being met with ongoing supply concerns. LME inventories are continuing their downward trend. However, this is unlikely to be due to a general supply shortage, but rather to metal flowing back into the US, as the price traded on COMEX has climbed again since September and is once more above the price on the LME."

"Given that the US government had refrained from imposing tariffs on refined Copper and there are currently no signs that it will change its stance, this development is surprising. We assume that the price difference will not last and that a recovery in LME inventories is therefore likely, given that metal production remains high in China, the most important producing country."