China demand, trade tensions weigh on copper

Zawya

a day ago

Copper prices fell on Wednesday as the outlook for demand in the world's biggest consumer China dominated the mood and the country's trade talks with the United States did little to ease concerns about a resolution of the tariff dispute.
The three-month copper contract on the London Metal Exchange (LME) slipped 1.2% at $9,639 a metric ton by 1036 GMT, its lowest level since June 5.
U.S. and Chinese officials said on Tuesday they had agreed on a framework but failed to reassure the markets the were close to a durable resolution of longstanding trade tensions.
"Downside risks to our copper outlook include the trade war dragging on and reduced policy stimulus from China," ING commodities analyst Ewa Manthey said.
"With uncertainty still high, volatility is likely to remain elevated across metals markets."
China's appetite for importing copper can be seen in the Yangshan copper premium at $43 a ton from $103 a ton in early May, the highest since mid-December 2023.
China's imports of copper fell by 2.5% to 427,000 tonnes in May from the previous month, data showed.
Prices drew some support from lower LME copper stocks . At 119,450 tons, they have dropped 50% in three months. Cancelled warrants or metal earmarked for delivery show another 70,700 tons is due to leave the LME system.
Draws from the LME system are mostly a result of the metal being shipped to the United States where prices on COMEX are higher because the U.S. administration is looking into imposing tariffs on imports of copper, traders said.
An increase in U.S. aluminium import tariffs to 50% last week from 25% previously has led to speculation that levies on copper have become more likely.
On the technical front, support for copper is around $9,600, at the 21-day moving average.
Among other metals, aluminium added 0.7% to $2,509 a ton, zinc rose 0.2% to $2,662, nickel fell 0.4% to $15,250, tin edged down 0.2% to $32,600 and lead gained 0.2% to $1,985.5.
(Reporting by Ashitha Shivaprasad in Bengaluru and Pratima Desai in London; editing by Barbara Lewis)