Escalation of Middle East conflict drives industrial metal prices higher, LME index hits record high

(1) The London Metal Exchange (LME) composite index for six base metals hit a record high on Tuesday, with copper prices surging to new peaks, aluminum prices extending their rally, and zinc prices breaking through $4,000 per ton for the first time since 2022. Supply-side issues have played a key role in this rally, but the US-Iran conflict continues to pose downside risks to prices by threatening global growth.(2) In the latest round of conflict, the US military claimed to have destroyed five Iranian oil tankers carrying crude oil after Tehran had attempted to attack a US Navy vessel; in response, the Iranian Revolutionary Guard stated it had targeted two US military ships and eight oil tankers that day, as well as 10 vessels involved in violations.(3) Brent crude oil rebounded to near $100 per barrel, intensifying market concerns about inflation ahead of Friday’s US CPI data release and further limiting the sustainability of upward moves in industrial metal prices.