JPMorgan: As trade tensions slow down, copper and aluminum prices will rise in H2

On May 15 (Thursday), renowned investment bank JP Morgan forecast that the average copper price for the second half of the year (H2) would be $9,225 per metric ton (mt), and the average aluminum price would be $2,325 per mt.

The bank noted that the better-than-expected easing of US-China trade tensions was a key factor in reducing the likelihood of an economic recession, thereby mitigating the downside risks to demand and prices for these two base metals.

The US and China have revoked, suspended, or adjusted tariff hikes in accordance with the consensus reached in high-level economic and trade talks, steering the trade conflict in a positive direction.

JP Morgan pointed out that in the short term, prices may rise further as Chinese buyers continue to make advance purchases following the easing of tariffs.

In a research report, the bank stated, "As demand eventually slows down, we also see that the tight micro fundamentals for metals like copper will gradually ease. Since the macro-driven sell-off in early April, micro fundamentals have been supporting prices."

The bank further forecast that with the US imposing additional tariffs on copper imported under Section 232, leading to a reduction in the volume of surplus goods shipped to the US, more supply will flow into Asia in the coming months.

Although the bank warned that copper prices exceeding $9,500 could trigger a price-sensitive reaction, it added that aluminum's low visible inventory coverage rate remains a supportive micro factor.

However, JP Morgan stated that a significant decline in automotive demand, which accounts for 25% of global aluminum demand, could lead to a drop in aluminum prices later this year.

At 14:45 Beijing time, three-month copper on the London Metal Exchange (LME) fell by $84 or 0.87% to $9,522.50 per mt, while three-month aluminum dropped by $20.5 or 0.81% to $2,508 per mt.