Aluminum Retreats from Multi-Year Peak as Metals Rally Takes a Breather
Aluminum prices have slipped from their highest level in over three years. Copper, meanwhile, remains steady near record highs. Investors are now carefully considering the next moves for industrial metals after a powerful rally at the start of the year.
Strong Start Faces Demand Questions
Industrial metals enjoyed a bullish run entering the new year. Copper hit records above $13,000 per ton. Aluminum reached its highest point since April 2022 on Monday. However, underlying concerns about demand persist. Many analysts worry that demand could soften, especially in China. Geopolitical risks also remain elevated, adding to market uncertainty.
Geopolitical Tensions and Trade Risks
Recent announcements by former President Donald Trump have introduced new complications. He plans to charge tariffs on any country doing business with Iran. This move risks straining relations with China. The world's two largest economies agreed to a trade truce just months ago. A resurgence in tensions between these nations could hurt risk assets, including metals. The precise impact remains unclear, but markets are watching closely.
Supply Constraints and Economic Factors
The LMEX Index, which tracks six major base metals, closed at its highest level since March 2022 on Monday. This follows a five-month gain. Expectations that supplies will struggle to keep pace with demand have supported the advance. The Federal Reserve's continued interest rate cuts have also played a role. Lower rates typically encourage investment in commodities like metals.
AI Boom and Speculative Activity
The artificial intelligence boom has spurred enthusiasm for metals, particularly copper. Data centers and electronics require significant amounts of copper, driving demand. Additionally, speculative buying in China has provided further support for copper prices. This combination of factors has kept copper near its record levels.
Tin Emerges as a Star Performer
Among the six base metals, tin has been the standout performer this year on the London Metal Exchange. It is nearing a record above $51,000 per ton after surging almost 40% in 2025. A crackdown on miners in Indonesia, a major producer, crimped supply last year. The industry is now waiting to see how exports unfold, which will influence future price movements.
Current Market Prices
As of 1:02 p.m. in London, aluminum was 0.2% lower at $3,177 per ton on the LME. Copper was 0.1% higher at $13,226 per ton. Tin rose 1.6%, following a 5.3% rally on Monday. These mixed movements reflect the cautious sentiment among investors as they assess the broader market landscape.
