Key industrial metals are consolidating after a blistering start to the new year, with aluminum holding near a multi-year peak and copper hovering close to an all-time high. Investors are now assessing the sustainability of the rally amid mixed demand signals and persistent geopolitical tensions.
Metals Rally Takes a Pause
Aluminum steadied at its highest level in over three years, while copper wavered around a record price. The moves come as the market digests a powerful bullish run that has characterized the opening weeks of 2026. On Tuesday, copper hit records above US$13,000 a ton on the London Metal Exchange (LME), and aluminum notched its highest price since April 2022.
The broader LMEX Index, which tracks six primary base metals, closed at its highest point since March 2022 this week following a five-month advance. This sustained gain is largely underpinned by a view that global supplies will be hard-pressed to match future demand, especially as the United States Federal Reserve continues its cycle of interest rate cuts.
AI Boom and Speculative Forces Drive Enthusiasm
A significant tailwind for the sector, particularly for copper, is the relentless artificial intelligence boom. The expansion of data centres and electronics manufacturing has spurred enthusiasm for the conductive metals required to build this infrastructure. Copper has received an additional boost from speculative buying activity in China, adding volatility and momentum to its price ascent.
However, the outlook is not without clouds. Analysts point to concerns that underlying physical demand, especially from the crucial Chinese market, could soften. Furthermore, geopolitical risks remain elevated, posing a threat to global trade flows and risk sentiment.
Tin Emerges as the Star Performer
Among the half-dozen metals on the LME, tin has been the standout performer this year. The metal is nearing a record above US$51,000 a ton after surging almost 40% throughout 2025. The rally has been fueled by a supply crunch following a crackdown on miners in Indonesia, a major global producer. The industry is now closely watching how Indonesian export policies unfold in the coming months.
As of the latest trading sessions, aluminum was 0.4% higher at US$3,197.50 a ton on the LME. Copper, meanwhile, edged 0.3% lower to US$13,164 a ton. Tin continued its impressive run, rising 3.2% after a 5.3% rally just the day before.
The market also faces a new layer of uncertainty from the trade policy front. Former U.S. President Donald Trump's recent announcement of planned tariffs on countries doing business with Iran risks complicating relations with China. This development comes mere months after the world's two largest economies agreed to a trade truce. While the direct impact of potential levies on metals is unclear, a resurgence in Sino-American tensions could negatively affect risk assets globally.
