Copper prices staged a strong recovery on Friday, climbing more than 2% from a three-week low after US President Donald Trump signalled that a deal with Iran to end the four-month conflict could be signed as soon as this weekend.
The positive development helped ease immediate fears over prolonged disruptions to global commodity supply chains.
The three-month copper futures on the London Metal Exchange (LME) surged during Asian and European trading hours.
The metal had been under pressure in recent sessions due to persistent geopolitical risks and concerns over higher energy costs stemming from the Strait of Hormuz disruptions.
Trump told reporters that while the agreement is not yet finalised, significant progress has been made.
Axios, citing sources familiar with the talks, reported that US and Iranian negotiators have already agreed on the text of a deal that would extend the current ceasefire by 60 days and include commitments on Iran’s uranium stockpiles.
However, there has been no official confirmation from Tehran so far.
Geopolitical optimism boosts sentiment
The potential breakthrough in US-Iran negotiations provided a significant boost to risk appetite across commodity and equity markets.
The ongoing war has severely restricted shipping through the Strait of Hormuz, one of the world’s most critical energy chokepoints, pushing up energy costs and creating uncertainty for industrial metals.
Copper, a key industrial metal used extensively in electric vehicles, renewable energy infrastructure, power grids, and construction, had faced downward pressure amid worries about slower global growth and elevated inflation.
Friday’s rally reflected growing hopes that a diplomatic resolution could normalise trade flows and reduce some of the inflationary pressures weighing on the sector.
Mining stocks also gain ground
Major mining companies saw their shares rise alongside the metal.
The optimism extended to other base metals, with aluminium and zinc also posting gains as traders priced in the possibility of improved global trade conditions and lower risk premiums.
However, analysts cautioned that the rally could prove short-lived if Iranian officials reject the terms or if implementation of any agreement faces delays.
Markets remain highly sensitive to developments from the region, with any negative headlines capable of quickly reversing recent gains.
Longer-term fundamentals supportive
Even with the potential ceasefire, the structural outlook for copper remains bullish.
Global supply continues to face constraints from underinvestment in new mines and declining ore grades, while demand from the green energy transition, data centres, and electrification remains robust.
A successful resolution to the Iran conflict could further support prices by improving economic visibility, lowering energy costs, and boosting industrial activity.
It would also reduce the risk premium currently embedded in copper and other metals.
What to watch next
Traders will closely monitor reactions from Iranian officials over the weekend and any official statements from Washington.
Confirmation of a deal would likely trigger further gains in copper and related assets, while any setbacks could see the metal give back some of its recent recovery.
For now, President Trump’s comments have injected fresh optimism into the copper market, helping it recover from recent weakness.
The coming days will be crucial in determining whether this rebound has legs or remains a temporary relief rally.
The three-month copper contract on LME was last at $13,694.63 per ton, up 1.6% from the previous close.
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