METALS-Copper climbs on optimism over possible US-Iran peace deal

By Eric Onstad

LONDON, May 6 (Reuters) - Copper prices extended gains on Wednesday, touching their highest in nearly two weeks, on hopes that the U.S. and Iran are close to a deal to end the war in the Middle East.

Benchmark three-month copper CMCU3 on the London Metal Exchange rose 2% to $13,390.50 a metric ton by 1430 GMT for a third straight session of gains. It earlier hit its highest since April 23 at $13,462.

Iran said it was reviewing a new U.S. proposal, after sources said Washington and Tehran were closing in on an agreement on a one-page memorandum of understanding to end the war in the Gulf.

"Copper is very strong after that headline about Iran and the U.S. agreeing to a one-page memo," said Robert Montefusco at broker Sucden Financial.

"We're also seeing oil coming off and then the other markets going up again."

Stocks jumped and oil benchmark Brent crude plunged 10% below $100 a barrel for the first time since April 22 after the report about the U.S. and Iran. MKTS/GLOB O/R

The most traded copper contract on the Shanghai Futures Exchange SCFcv1 climbed 1.6% to 102,660 yuan ($15,029.98) a ton. Chinese markets resumed trading on Wednesday after May Day holidays.

Montefusco said the metals markets also received a lift from data showing services activity in top metals consumer China expanded at a faster pace in April, helped by stronger growth in new business.

LME aluminium prices CMAL3 fell 1.8% to $3,524.50 a ton on hopes of easing Middle East supply disruptions. The region accounts for about 9% of global production of the metal.

LME tin CMSN3 surged 8.9% to a two-month high of $54,125 as speculators jumped in on worries about potential shortages. Data released on Wednesday on physical tin traded on the Jakarta Futures Exchange, which closely correlates with Indonesian exports, showed a slide of 83% compared to March, Tom Langston at the International Tin Association said.

"The drop... providing another bullish driver... reflects changes to Indonesia’s RKAB licensing regime, with producers requiring updated permits," he said. Miners in major tin producer Indonesia are required to submit an annual production plan or RKAB.

Among other metals, LME nickel CMNI3 dropped 2.1% to $19,235 a ton after touching $20,000, its highest since May 2024. Lead CMPB3 rose 0.2% to $1,975.50 and zinc CMZN3 advanced 1.1% to $3,409.