Copper slides on fresh trade tensions, concerns about China’s factory growth

LONDON — Copper and other base metals slipped on Wednesday on fears of slower demand due to renewed US-China trade tensions and worries about slowing growth in top metals consumer China.

Washington plans to impose a 25% tariff on $ 200 billion of imported Chinese goods after initially setting them at 10%, according to a source familiar with the matter, escalating the dispute between the world’s two biggest economies.

Investors also were disappointed after reports that a recent Chinese politburo meeting was less dovish than expected regarding monetary and fiscal easing, said Carsten Menke, commodities analyst at Julius Baer in Zurich. “I think the market is reacting in a sense that it’s not expecting a full-fledged easing in China, but more of a gradual easing and this has reversed some of the hopes that have been priced into copper during this very recent recovery.”

Also weighing on sentiment was data showing that China’s manufacturing sector grew at the slowest pace in eight months in July as export orders declined.

Three- month copper on the London Metal Exchange (LME) closed down two percent at $6,172 a ton. Copper shed 4.9% in July, but recently rebounded from a one-year low of $5,988 touched on July 19.

Factory growth stuttered across the world in July, heightening concerns about the global economic outlook as an intensifying trade conflict between the US and China sent shudders through trading partners.

Investors seemed to brush off news about labor unrest in Chile. The union at Escondida, the world’s largest copper mine, said that an early, partial vote count on a final contract offer suggests its members will reject the offer and approve a strike.

Aluminum fell 1.4% to end at $2,052 a ton after the US Treasury said it had extended a deadline for investors to divest holdings in Russia’s Rusal, which has been hit by US sanctions, to Oct. 23 from Aug. 5.

LME zinc lost 2.7% to finish at $2,555 a ton. The speculative net short position has declined to 22% of open interest from a peak of 29% on July 17, broker Marex Spectron said in a note.

The premium of cash zinc over the three-month contract rose to $64 a ton, the highest since October last year, usually indicating tightness in nearby supplies.

Nickel slid 3.1% to close at $13,590 a ton, lead declined 1.3% to $ 2,126 and tin shed 1.3% to $19,825. —