Prospects for US-Iran talks are boosted by China rebuilding its inventory, lifting market sentiment. Copper prices have erased all declines since the Middle East conflict.

As traders assess the prospects of possible peace talks between the United States and Iran, the price of copper continued to rise, erasing the losses caused by over six weeks of ongoing Middle East conflicts. On Wednesday, LME copper futures rose by 0.8%, surpassing the closing price of $13,343.50 per ton on February 27. As of writing, LME copper futures are trading at $13,286.35 per ton. Since the outbreak of the Middle East conflict, most base metal prices have experienced significant volatility. Initially, copper prices fell due to market concerns about disrupted supply chains and resulting economic slowdown. However, with last week's temporary ceasefire agreement between the US and Iran, market risk appetite has improved. Meanwhile, there are reports that the US and Iran are planning to hold a second round of talks in the future, along with signs of recovering demand from China, further improving market sentiment. Due to the recent impact of the Middle East conflict, causing domestic copper prices in China to fall below 100,000 yuan per ton, Chinese processors have increased their purchasing efforts, leading to a significant decline in domestic copper inventories. Analysts state, "Copper prices are rebounding. First, China is restocking, and as peace talks progress, concerns about inflation are easing." "The worst phase is over." Copper is widely used in electric vehicle batteries, data centers, and many other fields. With the wave of rapid development in global artificial intelligence (AI) infrastructure, data centers are becoming the true "new copper mines." Copper, as a traditional industrial metal, with its indispensable electrical and thermal conductivity properties, has become the core material supporting the development of the AI industry. A report from Morgan Stanley predicts that by 2026, global data center copper consumption will increase to 740,000 tons, contributing 0.6 percentage points to global copper demand growth; by 2027, data center copper consumption is expected to reach 1 million tons (making up 2.8% of total demand), further increasing to 1.3 million tons by 2028 (3.3% of total demand), with a compound annual growth rate of 40%. As governments around the world become increasingly concerned about critical metal supplies, copper is attracting more attention. Copper is crucial for the energy transition, but miners and traders have long warned that investments in new copper mines have not kept pace with the growth in demand. Analyst Henry van from the Tok Group stated at an industry conference in San Diego that while energy crises have short-term impacts on the economy, as economies shift towards electrification, this severe shock may also be beneficial for the long-term growth of metals. He said, "All the major trends driving the rise in copper prices will now accelerate. The momentum for more electrification and power consumption free from geopolitical shocks is greater now than ever before." It is worth mentioning that one of the reasons that drove the strong rise in copper prices earlier was the threat of import tariffs on metals, including copper, imposed by US President Trump, sparking a craze of large-scale copper shipments to the US. This week, the price of copper in New York is $283 per ton higher than LME copper prices, reaching the highest premium level since December last year. Investors still expect the US Department of Commerce to make a decision on refined copper tariffs when it updates the US copper market by the end of June.