Copper slides as optimism over US-China talks fades

LONDON — Copper posted its biggest one-day drop in nearly a month on Wednesday as fading optimism that a China-US trade standoff was at an end knocked appetite for cyclical assets, helping pull the metal from the previous day’s high.

Stock markets slid and the dollar fell against the Japanese yen — seen as a haven from risk — after US President Donald Trump said he was not pleased with recent trade talks with China.

His comments came after US Treasury Secretary Steven Mnuchin said over the weekend that the prospect of a trade war between the two countries was “on hold,” giving a boost to nominally riskier assets like stocks and industrial metals.

“If you enter a phase where trade growth slows down, then it is quite bad news for the Chinese economy,” Oxford Economics commodities analyst Daniel Smith said.

“The risks around a lot of these things are definitely much higher than they were a few months ago.”

China is the world’s largest consumer of copper, which is chiefly used in construction.

Three- month copper on the London Metal Exchange (LME) fell as low as $6,805 a ton before ending the day at $6,867 a ton, down 1.6%. That is its biggest retracement of any day since April 27.

On-warrant stocks of copper in LME warehouses — metal not earmarked for delivery and therefore available to the market — fell 7,975 tons to 226,300 tons, their lowest since late January. Global miner Rio Tinto Ltd. said it was in discussions to sell its interest in the world’s second largest copper mine to Indonesia’s state mining holding company Inalum. An Indian court halted the proposed expansion of Vedanta Resources copper smelter where a day earlier 11 people were killed when police fired on protesters seeking closure of the plant on environmental grounds.

LME lead closed up 0.10% at $2,476.50 a ton, having hit a 12week high in the previous session after Chinese speculators drove a rally based on potential supply shortages.

LME nickel finished 0.90% lower at $14,650 a ton. Nickel remains the best performer among base metals, with a year-to-date gain of nearly 14%. LME nickel stockpiles fell by another 2,454 tons, data on Wednesday showed, and are at their lowest since 2014, underlining a deficit in the metal used for stainless steel.

LME zinc closed down 0.90% at $3,029 a ton, while aluminum was flat at $2,270 a ton. Tin finished the day up 0.50% at $20,625 a ton. —