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Uncertainties persist in base metals market regarding US-China trade deal

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June 14, 2025
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There is a considerable amount of uncertainty in the base metals market surrounding the implication of the trade deal between the US and China. 

Base metal prices reacted unevenly to the US-China tariff agreement. Aluminium prices initially increased, while nickel and copper prices declined.

At the time of writing, the three-month copper contract on the London Metal Exchange was at $9,574 per ton, down 1.3%. Nickel was up 0.2% at $15,136 a ton.

The agreement is beneficial for base metals as it mitigates the risk of renewed conflict escalation, according to Commerzbank AG.

On the other hand, tariffs, particularly those imposed on China, continue to be considerably higher than pre-Trump levels. 

This elevated tariff environment is expected to suppress demand within the metals market, which is of paramount importance, the German bank said in a report.

Aluminium prices

“Meanwhile, the rise in aluminium prices could be mainly due to supply concerns,” Thu Lan Nguyen, head of FX and commodity research at Commerzbank, said in the report.

LME inventories have been consistently decreasing since last spring. 

Simultaneously, whispers suggest significant market concentration, with a handful of companies reportedly holding substantial positions, enabling them to procure vast amounts of aluminum, Nguyen said.

She added: 

This could cause difficulties for counterparties given the low inventory levels and lead to a so-called ‘short squeeze’.

Past market trends, mirroring current conditions, have consistently resulted in significant price surges in the metal markets. A notable instance is the dramatic rise in nickel prices observed in 2022.

At the time of writing, the three-month aluminium contract on the London Metal Exchange was at $2,485 per ounce, down 1.5% from the previous close. 

Iron ore remains under pressure

Iron ore prices continued to face downward pressure, dropping below $95 per ton in Singapore on Friday. This decline occurred ahead of China’s industrial production figures release on Monday.

China’s iron ore imports in May were reported on Monday, showing a 4% year-on-year decrease to 98.1 million tons.

In the first five months of this year, an average of 97.3 million tons were imported. This signifies a decline of approximately 5% when compared to the same period last year.

Meanwhile, China’s steel production figures, based on high-frequency data, suggest a probable year-on-year decline in May.

“While the official figures will not be published until Monday, figures from the industry association point to a decline of 2%,” Nguyen said. 

China sales figures

Daily sales figures from the Chinese real estate market continue to show no expected improvement in steel demand from this sector in the near future.

Therefore, a significant decline in real estate sales is anticipated for May, a trend that has persisted into June, according to Commerzbank.

“Weak property sales are therefore likely to continue to weigh on construction starts and thus on steel demand,” Nguyen added in the report. 

In view of the ongoing difficulties in the Chinese property market, we continue to see only limited potential for recovery in iron ore prices.

The post Uncertainties persist in base metals market regarding US-China trade deal appeared first on Invezz

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