METALS-Copper rises on Middle East truce

By Polina Devitt

LONDON, June 25 (Reuters) - Copper prices rose on Wednesday supported by a tentative ceasefire between Iran and Israel, which improved the overall market sentiment, with the metals market attention shifting to a sharp fall in premiums for nearby copper contracts.

Three-month copper CMCU3 on the London Metal Exchange was up 0.5% at $9,717.50 a metric ton by 1600 GMT.

Copper has been steady so far this quarter as it is caught between concerns about global growth prospects, restricted copper concentrate supply, and reductions in stocks from LME-registered warehouses, said Standard Chartered analyst Sudakshina Unnikrishnan.

"Uncertainty over the timing of a potential U.S. copper tariff continues to cause dislocation in regional copper inventory moves, as the wide COMEX-LME arbitrage attracts copper inventories into COMEX," Unnikrishnan added.

The market's focus was on the premium for the LME cash copper contract over the three-month forward CMCU0-3, which dropped to $87.5 a ton on Wednesday from $280 on Monday, its highest since November 2021.

The premium, known as backwardation, fell on expectations that deliveries of more than 30,000 tons of copper to LME-registered warehouses were due in coming weeks to help ease the tightness created by recent outflows from the stocks.

"It would be a step forward," said a copper trader. From his point of view, available copper stocks in the LME system would need to rise above 100,000 tons from the current 56,250 tons to ease the tightness significantly.

In other LME metals, some investors were selling aluminium, which had outperformed in recent days due to the Iran-Israel war risks, and buying zinc in relative value trades, Alastair Munro at Marex said in a note.

Aluminium CMAL3 fell 0.5% to $2,565 a ton, while zinc CMZN3 rose 1.0% to $2,707 after touching its three-week high of $2,722. Lead CMPB3 added 0.5% to $2,029 after hitting a three-month high of $2,049.

Tin CMSN3 gained 2.7% to $33,165 after hitting $33,230 for its highest since April 8, and nickel CMNI3 climbed 1.1% to $15,065.

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