Will Syria Attack Boost Base Metals? SMM Reports

SHANGHAI, Apr. 7 (SMM) - The United States launched dozens of cruise missiles Thursday night at a Syrian airfield. Risk aversion assets thus received a boost. As of 10:15 am April 7, June gold contract on the Shanghai Futures Exchange (SHFE) rose 1.55%, and June silver on the bourse increased 1.64%. NYMEX May oil contract reported a 1.82% rise.

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Will this geopolitical issue give a lift to base metals market?

Analysts see limited effect on base metals from this attack. The Middle East is far from major copper markets. Besides, wars in the region are very common. Even the war between the US and Iraq begun March 20, 2003 did not affect base metals significantly, on top of which China’s base metals rose immediately but then fell back.

Everbright Futures’ Metal Chief Research Officer Xu Maili expects risk aversion to rise in the near term on the heels of the war, which will drive up gold. But any boost on base metals will be limited because they are not safe haven assets.

SHZQ’s Luo Liang said effect on base metals will be limited in the near term. The attack raised risk aversion, pushing down the US dollar index and lifting crude oil. Influence on base metals will be insignificant, unless a large-scale military action, which would definitely lead to more military consumption. But, the resultant boost to base metals will also be feeble. 

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