Fears of new trade tariffs push base metals lower

LONDON — Prices of most industrial metals slipped on Monday after reports that the United States may be about to impose tariffs on another $200 billion worth of Chinese goods.

US President Donald Trump was expected to announce the new tariffs on Monday and China has said it would retaliate.

The tit-for-tat dispute has led to concerns that demand for metals will weaken and is the key factor driving prices lower, said Societe Generale analyst Robin Bhar.

“Fear (of more tariffs) is dominating the markets,” he said.

Benchmark copper on the London Metal Exchange (LME) closed down 0.5% at $5,945, near a 14-month low of $5,773 touched in August and down nearly 20% from its June peak.

Speculators are betting that prices will fall further, with the net short in LME copper at 17% of open interest, brokers Marex Spectron said. Investors have net short positions in all LME industrial metals, they said.

Prices are falling despite signs of a tighter market, with copper inventories in LME-registered warehouses at 221,925 tons, the lowest since January.

Weak economic data in China has exacerbated demand fears. China is the world’s largest consumer of industrial metals.

Low prices are, however, tempting bargain hunters. Chinese copper import premiums at $96 a ton are the highest since February 2016.

Chinese copper output rose to 749,000 tons in August, up 10.5% from the same month last year. Production of other metals also rose, though zinc output fell.

US authorities said that buyers of aluminum from Russia’s Rusal before it was hit by sanctions in April could sign new contracts with the company but did not say whether there would be an extension to the Oct. 23 deadline for US customers to wind down business with Rusal.

The premium of three-month aluminum over the cash contract is more than $35. That is its highest since late 2015, partly because of concerns that supply could tighten if sanctions on Rusal are not lifted.

Philippines President Rodrigo R. Duterte on Monday repeated a call to shut all mines in the country after deadly landslides. The Philippines is the world’s second-biggest supplier of nickel ore.

Among other industrial metals, LME aluminum ended 0.5% down at $2,032 a ton; zinc finished 0.6% lower at $2,320; nickel lost 3.1% to $12,260; lead closed up 1.6% at $2,072; and tin slipped 0.1% to $19,025. —