Hindustan Copper shares rally 7% as red metal prices near six-week peak

Hindustan Copper shares rallied 7% to Rs 565.00 on the BSE on Wednesday, riding a sharp rebound in global copper prices that are hovering near a six-week high as hopes of a de-escalation in the Middle East conflict sent the red metal surging, erasing all losses sustained since the war began more than six weeks ago.

"All of the big trends that have been pushing copper higher are now going to be supercharged," Henry Van, analyst at Trafigura Group, was quoted as saying by Bloomberg.

"There is a bigger incentive than ever before to do more electrification and insulate energy consumption from geopolitical shocks." Van acknowledged that a sharp shock to global energy supplies is set to weigh on copper demand in the near term, but argued this would ultimately accelerate the metal's long-term growth as economies pivot toward electrification.


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The catalyst for Wednesday's move was U.S. President Donald Trump's statement on Tuesday that talks to end the Iran war could resume in Pakistan over the next two days, following the collapse of weekend negotiations that had prompted Washington to impose a blockade on Iranian ports. The prospect of renewed U.S.-Iran peace talks spurred a broad rally across industrial metals.

The most-traded copper contract on the Shanghai Futures Exchange rose 2.16% to 102,880 yuan ($15,090.35) per metric ton as of 0222 GMT, touching its strongest level since March 3 at 103,130 yuan earlier in the session. Benchmark three-month copper on the London Metal Exchange was up 0.56% at $13,358.5 per ton after hitting its highest since March 2 at $13,392.5 earlier.

Demand fundamentals added further fuel. Refined copper consumption in China could grow by an average of 3.7% annually over the next decade, a researcher from state-owned China Minmetals Corp said on Tuesday. China's plan to halt exports of sulphuric acid also stoked fears over a potential hit to copper and nickel supply chains, given the acid's critical role in processing both metals. Easing oil prices, meanwhile, calmed fears over inflation and a global economic recession that could dent demand for industrial metals, further underpinning the rally.

Nickel prices also advanced as a shortage of sulphur, triggered by disruptions from the Iran war, forced several Indonesian nickel processors to trim output by at least 10% since last month. Shanghai nickel jumped 2.57% while the London price firmed 0.38%. Elsewhere in metals, SHFE tin climbed 3.94%, lead added 0.45%, and zinc advanced 0.49%, while aluminium slipped 0.12% on easing supply concerns.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)