Geopolitical risks ease to boost LME copper price rebound by 2%, but institutions warn that the risk of a pullback still looms.

Due to the market's optimistic view of the United States' diplomatic efforts to end the Middle East conflict, risk appetite has increased, leading to a significant turnaround in the global industrial metal market. The copper price on the London Metal Exchange (LME) rebounded on Wednesday, rising more than 2% at one point. Previously, Trump stated that Iran had sent him a "gift" as a sign of goodwill in negotiating an end to the conflict. However, the US is sending more troops to the region, and reports indicate that the US and a group of regional mediators are still waiting for Iran's response. Nevertheless, Trump's comments were enough to boost metal prices, halting the previous decline caused by concerns that war would inflate inflation and drag down global economic growth. Copper prices have risen by about 3% so far this week, after a cumulative decline of about 11% in the previous three weeks. From a deeper market perspective, the rise in copper prices is a key correction following the earlier sharp fluctuations this month. During the dark period in the fourth week of the Middle East conflict, international oil and gas prices soared, causing market concerns about a serious "stagflation" quagmire for the global economy, forcing major central banks like the Fed to take a more aggressive hawkish stance. Copper prices suffered, falling by more than 10% earlier this month. Li Xuezhi, director of Chaos Fortune Futures Research Institute, said, "The progress of the war is very difficult to judge, and the news is mixed. As long as the war continues, the risk of a pullback in base metal prices still exists. We are currently cautious and choose to wait and see." Although short-term boosted by diplomatic news, the medium-to-long-term fundamental situation in the copper market still presents a complex situation of simultaneous supply shortages and high inventories. On one hand, major copper-producing countries like Chile and Indonesia are facing severe production declines or sudden stoppages, allowing LME copper prices to remain above $12,000 per ton even amid fluctuations. On the other hand, copper inventories at the Chicago Mercantile Exchange (CME) have surged to the highest level since 1989, approaching 1 million metric tons, providing some physical support that partly offsets the premium brought by excessive speculation. Meanwhile, the Trump administration is trying to include Ukraine's abundant mineral resources, such as titanium and lithium, as bargaining chips in future peace talks. However, with the emergence of diplomatic turns, market logic quickly switched from risk aversion mode back to growth expectations. Except for aluminum, which has been weakened by logistics bottlenecks caused by uncertainty in the Hormuz Strait, most industrial metals including zinc and nickel have risen alongside copper prices, reflecting the industrial production sector's confidence in stable future raw material costs and demand recovery. On Wednesday, aluminum was the only metal on the LME to fall. The Middle East region accounts for about 9% of the production capacity of this light metal. Goldman Sachs raised its second quarter price expectation for aluminum from $3,100 per ton to $3,200 per ton, and pointed out in a report that the impact of supply disruptions would be partially offset by weak global demand. As of press time, copper prices on the LME rose by 1.38% to $12,259 per ton; zinc prices climbed by 0.82%; aluminum prices fell by 0.32% to $3,235.00 per ton.