Copper Soars Midweek

Copper prices are exploding higher on Wednesday, with the futures market seen breaking out to 13-week highs. The move comes amidst a wave of risk-on trading as traders cheer the easing of tensions between the US and Iran. Trump announced yesterday that he was pausing Project Freedom while the Iranian Foreign Minister was heard citing good progress in peace talks. As such, there is now a growing view that the two sides, helped by China could be on the way to agreeing a peace deal in coming weeks, avoiding the return to war which looked at risk of materialising at the start of the week.  

Weak Dollar Helping Copper

The US Dollar has fallen sharply mid-week, tracking the move lower in energy prices, which is helping feed into better copper demand also. In terms of other supply/demand factors affecting copper prices, news that China has restricted exports of sulphuric acid (a key input for copper refining) has hit supply projections in Chile, the largest global producer of copper. As the impact of the Iran war continues to impact production and distribution, copper prices look poised to continue higher near-term until we hear any news that Iran is properly reopening the Strait of Hormuz for foreign commercial vessels.

Technical Views

Copper

The rally in copper has seen the market reversing sharply higher off 5.8550 support, now breaking out above 6.1020. While above here, focus is on a test of the 6.2845 level next ahead of the record highs above at 6.5830.