Categories:
Base Metals
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General Market Commentary
Topics:
General Base Metals
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General Market Commentary
Trade war drags copper to 4-month lows
LONDON, May 22 (Reuters) - Copper prices fell on Wednesday to a four-month low as an intensifying trade dispute between the United States and China drove industrial metals broadly lower.
Investors fear the dispute will damage economic growth and weaken demand for metals.
Aluminum also hit its lowest since January 2017 after a Brazilian court lifted production restrictions on a major alumina plant.
Benchmark copper on the London Metal Exchange (LME) was down 0.5% at $5,965.50 a tonne at 1013 GMT after reaching $5,957, the lowest since Jan 25.
The metal used in power and gas has fallen some 20% from highs in early June 2018, before the trade conflict began.
Societe Generale analyst Robin Bhar said the worsening macro-economic backdrop and trade situation were pushing metals lower, with speculative investors leading the selling.
“Physical buyers are few and far between with all this uncertainty,” he said.
TRADE WAR: Beijing is ready to resume trade talks with Washington, China’s ambassador to the United States said, as a top U.S. business lobby in China said nearly half its members were seeing non-tariff barrier retaliation in China.
Media reports also said Washington was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision, potentially inflaming the confrontation.
JAPAN: Japanese exports contracted for the fifth month in April, underlining the threat from the trade dispute.
YUAN: China’s central bank said it would issue yuan-denominated bills in Hong Kong. This could help stabilize the currency which has slipped around 3% against the dollar since mid-April, making metals more expensive Chinese buyers.
COPPER POSITIONING/TECHNICALS: Speculators’ net short in LME copper has expanded to 6.2% of open contracts, the most since October, brokers Marex Spectron said.
“Copper is likewise under pressure from a technical perspective. If it is unable to defend the $6,000 mark, technical selling is likely to send the price into a further tailspin,” said analysts at Commerzbank.