JP Morgan forecasts rise in copper, aluminium prices in second half of year

May 15 (Reuters) - JP Morgan projected on Wednesday that copper prices will average $9,225 a metric ton in the second half of this year and aluminium will average $2,325.

The bank cited the better-than-expected U.S.-China trade reprieve as a key factor in reducing recession probabilities, thereby mitigating downside risks to both base metals demand and prices.

The U.S. and China agreed to a 90-day suspension of reciprocal tariffs following discussions in Geneva over the weekend.

JP Morgan noted that in the near term, prices could continue to rise due to a continuation of Chinese buyers bringing forward their purchases following the tariff reprieve. However, the bank remained cautious of the longevity of this extension, anticipating a more bearish outlook in second half of 2025.

"With demand eventually downshifting, we also see a subsequent unwinding of tight micro fundamentals in metals like copper which have been supportive for prices since the early-April macro-driven selloff," the bank said in a research note.

The bank further expects greater supply to reach Asia in the coming months as excess shipments to the U.S. decline after an anticipated Section 232 tariff on U.S. copper imports.

While the bank warned that copper prices above $9,500/mt could face Chinese price sensitivity, it added that aluminium's low visible inventory coverage remains a supportive micro factor.

However, a significant drop in auto demand, which accounts for 25% of global aluminium demand, could expose aluminium prices to a decrease later this year, JP Morgan said.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was trading at $9,532 a metric ton by 0416 GMT, while aluminium CMAL3 was at $2,520 a ton.