London copper slips on Hormuz fears as demand gloom offsets supply chain woes
XLB•Other base metals mixed in London and Shanghai
Aluminium prices increased amid the escalation, which threatened to undermine the return of supply from major producers in the Middle East. On the LME CMAL3, it was up 0.63%, while on the SHFE SAFcv1 it increased 1.37%.
Among other LME metals, zinc CMZN3 was steady, lead CMPB3 ticked 0.08% higher, nickel CMNI3 added 0.2% and tin CMSN3 added 0.44%.
Elsewhere on SHFE, zinc SZNcv1 lost 0.4%, lead SPBcv1 lost 0.69%, nickel SNIcv1 gained 0.61% and tin SSNcv1 lost 0.49%.
Hormuz tensions support prices but also cloud the outlook
U.S. President Donald Trump and Iran have announced competing blockades of the Strait of Hormuz. The U.S. has renewed its attacks on Iran, and tankers have come under attack in the vital waterway.
The escalation represents a "double-edged sword for copper," Chinese broker Everbright Futures said in a note.
It supports prices for the red metal amid fears of disruption to the copper supply chain, while weighing on them by raising economic and trade risks and dampening demand, the broker said.
The fighting has rekindled fears that higher energy and input costs would force policymakers to raise interest rates to fight inflation, thereby dampening demand for growth-dependent industrial minerals like copper by stifling economic activity.
Oil prices spiked to their highest level in four weeks amid the latest escalation, but remained below their peak levels from the height of the conflict. Non-yielding gold slid to a two-week low on fears of higher U.S. interest rates.
This week, markets are also looking ahead to Kevin Warsh's debut appearance before Congress as Federal Reserve chair and to U.S. inflation data for clues on the dollar's direction.
