(Bloomberg) -- Copper rallied Wednesday as risk appetite improved in global financial markets and warnings about the metal’s tight supply dynamics persisted.

The London Metal Exchange price rose as much as 1.6%, tracking an early rebound in equities and bond markets as the US trading day got underway. Stocks sank Tuesday after Federal Reserve Chairman Jerome Powell indicated the central bank is likely to keep rates higher for longer due to ongoing worries about inflation.

At the Cesco copper conference in Santiago, analysts continued to offer bullish forecasts on the market outlook, with Goldman Sachs Group Inc. reiterating calls for a major deficit and CRU Group saying it doesn’t see much room for prices to fall.

On Tuesday, Trafigura Group Chief Executive Officer Jeremy Weir said copper will need to surpass $10,000 a ton to meet demand.

In the aluminum market, there were further signs that traders are moving to execute a complicated but lucrative trade involving Russian metal in the LME’s warehouse network, with nearby aluminum price spreads tightening and metal being ordered out of depots in South Korea. 

In tin, meanwhile, traders are alert to the risk of a looming supply squeeze after a sharp drawdown in LME inventories and the appearance of a large long position in the futures market.

Copper was up 1.1% at $9,576 a ton as of 4:38 p.m. local time on the LME, as all base metals moved higher. Tin, nickel and zinc all rose more than 2%.

©2024 Bloomberg L.P.