London, April 9: On Thursday, London Metal Exchange (LME) copper futures fell as doubts regarding the sustainability of the U.S.-Iran ceasefire—and the potential for rising oil prices to fuel inflation—heightened market concerns over global economic growth and demand for industrial metals.

As of 16:05 GMT, LME three-month copper fell 0.14% to $12,682 per tonne.

This week, LME copper rose 2.69%, bringing its year-to-date gain to 1.74%. Driven by speculative buying, LME copper prices had previously hit an all-time high of $14,527.50 per tonne on January 29.

On Wednesday, copper prices briefly rose to a three-week high of $12,755.50, as a two-week ceasefire agreement reached between the United States and Iran sparked optimism that shipping through the Strait of Hormuz could soon resume. However, concerns regarding the durability of this fragile truce—coupled with continued disruptions to shipping in the Strait of Hormuz—fueled a rebound in oil prices. Elevated oil prices could drive up inflation and dampen consumer spending, thereby undermining global economic growth.

Furthermore, copper inventories held in LME and U.S. COMEX registered warehouses exceed 900,000 tonnes—double the level seen at the beginning of the year—which is also exerting downward pressure on copper prices.

Morgan Stanley analysts note that, on paper, global copper inventories—including those held in the U.S.—appear to be at elevated levels. In reality, however, even if tariffs are ultimately not implemented, the copper inventories held within the U.S. are unlikely to be re-exported. This implies that these U.S.-held inventories function more as strategic reserves.

Due to continuously climbing LME inventories, LME spot copper futures have recently traded at a significant discount relative to three-month copper futures.

On Thursday, LME three-month aluminum fell 0.2% to $3,448 per tonne. Disruptions to aluminum shipments from the Middle East caused the premium of LME spot aluminum over the three-month contract to rise. Last week, this premium climbed above $70 per tonne, reaching its highest level since 2007. Last year, the Middle East produced nearly 7 million tonnes of primary aluminum—accounting for 9% of the global supply—while this year, the global supply is estimated at approximately 75 million tonnes.

Closing prices for other LME metals were as follows: zinc rose 1.1% to $3,330 per tonne; lead fell 0.7% to $1,927 per tonne; tin rose 0.4% to $47,815 per tonne; and nickel fell 1% to $17,120 per tonne.

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