Copper's Next Move Depends On Washington, Not The Strait Of Hormuz
By Michael Kern - Jul 03, 2026, 2:00 PM CDT
- Aluminum's war-driven price spike has mostly unwound even as Gulf shipping recovery slips toward 2027.
- Copper's next major price move now hinges on a delayed Trump administration tariff decision, not the Strait of Hormuz.
- Tin and lead, both untouched by the Iran war, posted H1's biggest swings in opposite directions, up 27% and down 7%.
Six months after Operation Epic Fury upended the metals complex, the Strait of Hormuz still can't decide if it's open. Days after the two countries signed a memorandum of understanding on June 17, Iran's military declared the strait closed again, only for Iran's own foreign ministry to tell state media shipping was “operating normally.”
Under that same agreement, Washington has until July 19 to fully lift its naval blockade, while Tehran is only committed to its “best efforts” to restore pre-war traffic. Base metals have spent the first half of the year pricing exactly that kind of confusion. What's changing heading into the second half is which risk is actually moving the tape.
The LME Index, the exchange's basket of six base metals, swung from euphoria to dejection and closed H1 somewhere in the middle. The dispersion underneath that number tells the real story: metals with direct Gulf exposure are unwinding their war premium, while the ones without one never needed it.
Missile strikes on smelters in the UAE and Bahrain knocked out roughly 2 million tons of regional annualized output between February and May, sending LME three-month aluminum to a four-year high above $3,780 a ton in early June. Most of that premium has already unwound as the market prices in something like normality, even as Gulf oil flows through Hormuz remain years from fully recovering.
The strait closure squeezed sulfuric acid supply, hitting leach producers, while collapsing smelter treatment terms have left processors relying on byproducts just to stay afloat. Copper prices topped $14,000 a ton in June, within reach of January's record. But copper's real swing factor now sits in Washington, not the Gulf.
Commerce Secretary Howard Lutnick's June 30 review of the domestic refined copper market was supposed to tell President Trump whether to impose a tariff starting at 15% in January 2027, and the decision still hasn't landed. BNP Paribas metals strategist David Wilson said opponents are “still actively and significantly lobbying to not have a tariff,” a sign the outcome remains genuinely contested.
Zinc, largely insulated from the war, was H1's surprise performer, up 14% by June on an unexpected global deficit outside China. Nickel tracked Indonesian mining quotas more than anything in the Gulf, spiking on production cuts before sliding back on talk of a loosening. Tin and lead, untouched by the conflict entirely, simply followed their own fundamentals: tin up 27% on a structural supply squeeze, lead down 7% on surplus and warehouse arbitrage.
As Vandana Hari of Vanda Insights put it, the strait “continues to reopen but it's patchy, unpredictable, and not fully transparent.” Once that premium finishes fading, base metals will trade the way they always have, on their own supply and demand, and, for copper, on whatever Washington decides next.
By Michael Kern for Oilprice.com
