Copper steadies near nine-month low as US-China trade concerns dominate

LONDON — Copper prices hit nine-month low on Wednesday on worries about global growth due to a trade spat between the United States and China, but a lower dollar and an equity market recovery offered some support.

Benchmark copper on the London Metal Exchange (LME) ended down 0.5% at $6,491 a ton after earlier touching $6,490, its lowest since Oct. 5.

Prices of the metal, used widely in power and construction, have tumbled more than 10% since June 7.

Xiao Fu, head of commodity markets strategy at BOCI Global Commodities, said tensions between China and the United States will keep markets volatile.

“Fears have not dissipated and will likely cap metals prices,” Ms. Fu said.

A weaker US currency makes dollar- denominated commodities cheaper for non- US firms, which could mean stronger demand for metals like copper.

This relationship is used by funds which trade using buy and sell signals generated by numerical models.

Latest data from Marex Spectron shows speculative short positions in LME copper — bets on lower prices — on the LME at 8% of open interest, levels last seen in Sept. 2016.

US President Donald Trump has this year sought to renegotiate some of the United States’ trading relationships, in particular with China.

Mr. Trump has imposed tariffs on some imports, in turn sparking retaliatory action by other countries, raising fears of a global trade war.

China accounts for nearly half of global copper demand, estimated this year at around 24 million tons.

The US accounts for a smaller, but nevertheless significant 8% China’s manufacturing growth cooled slightly in June as firms faced rising input costs and a decline in export orders amid an escalating trade dispute with the United States, a private survey showed on Monday.

“Somewhat softer economic growth in China — as evidenced by the slight fall in the unofficial PMI — can explain some of the weakness in industrial metals prices,” analysts at Capital Economics said in a note.

China’s central bank moved to calm jittery markets after the yuan dropped through the psychologically significant 6.7 to the dollar mark, hitting its lowest in almost a year as anxieties over US trade frictions deepened.

Among other industrial metals, aluminum closed down 0.9% at $2,080 a ton, zinc lost 1.2% to $2,789, lead rose 0.2% to $2,390, tin fell 0.5% to$ 19,655 and nickel slipped 0.9% to $ 14,425. —