Expectations Fed will raise interest rates anew hurt industrial metals

LONDON — Copper eased and aluminum briefly touched its lowest since mid-December on Monday as cyclical assets broadly weakened ahead of an expected rise in US interest rates and as finance ministers met for a G20 summit.

Along with concerns that higher interest rates could dampen growth, US President Trump’s announcement of import tariffs on steel and aluminum has sparked fears of a global trade war that could weigh on demand for raw materials.

“Anything that undermines global growth will undermine metals consumption,” said Societe Generale analyst Robin Bhar.

Aluminum, which has registered sharp increases in stockpiles in recent weeks as cuts to Chinese smelting capacity came to an end, slipped to its lowest since mid-December before paring losses as the dollar retreated.

“We’ve seen some big stock builds on the London Metal Exchange and, more importantly, the Shanghai Futures Exchange, and that’s the root of the problem,” Mr. Bhar said.

“It must be that the winter cuts were not as deep as the market had been expecting, plus demand must be weaker than originally thought.”

London Metal Exchange (LME) copper closed 0.50% down at $6,854 a ton, having slid earlier to its lowest since March 9 at $6,785.

Shares were stuck on their worst run since November as caution gripped traders in a week in which the Federal Reserve is widely expected to raise US interest rates.

Worries about a possible USChina trade war and frustration over Mr. Trump’s steel and aluminum tariffs threatened to dominate this week’s G20 gathering of finance leaders.

Growth in prices of new homes in China slowed in February from the previous month as government curbs aimed at tempering speculative demand softened prices in the biggest cities.

LME three-month aluminum fell to its lowest since Dec. 19 at $2,069 a ton. It later recovered to end the day at $2,088, up 0.10%.

Shanghai aluminum stocks surged by 87,303 tons to a record 934,216 tons, data showed on Friday. Stocks of the metal in LME warehouses fell by 12,250 tons, according to data released on Monday, but are still up 22% from February lows.

Hedge funds and money managers trimmed their net long positions in COMEX copper contracts in the week to March 13, regulatory data showed on Friday.

LME zinc closed little changed at $3,261 a ton, while lead ended 0.70% down at $2,367. Tin lost a percent to $20,780 and nickel finished down 1.1% at $13,480. —