Trade tensions, rising US rates weigh on copper

LONDON — Copper prices slid on Tuesday amid lean factorygate inflation data in China and nagging concerns about global growth, trade tensions and rising US interest rates.

Chinese stocks fell overnight after data showed factory-gate inflation in the world’s top copper consumer had cooled for a third straight month in September.

A degree of calm returned to battered global stock markets, although caution prevailed given tensions with Saudi Arabia, trade worries and concerns over a global growth slowdown. “Nothing positive has come along. Trade tensions (between the United States and China) could (go) into next year, oil prices are up and (US) interest rates are rising,” said William Adams, head of research at Fastmarkets, adding that while copper’s supply-side fundamentals are strong, they will only start driving prices higher once the macroeconomic headwinds subside, which is not on the cards in the near term.

Three-month copper on the London Metal Exchange ended down 1.4% at $6,215.50 ton.

The World Steel Association doubled its 2018 and 2019 forecasts for growth in global demand for the material used in sectors from cars to construction, but said trade tensions were clouding the market’s outlook.

“(Base metals) will continue to see choppy price action amidst ongoing macro uncertainty, although given the more bullish micro situation we look at price dips as buying opportunities,” Marex Sepctron said in a note.

The broker pointed to low warehouse inventories and said it is likely that “any ratchet higher in trade tensions (should) result in China resorting to infrastructure stimulus to support growth.”

Yangshan copper import premiums have been hovering near $120 since late-September, levels last seen in 2015, indicating strong demand.

The world’s biggest miner BHP has nearly doubled its stake in SolGold Plc as it eyes SolGold’s promising Cascabel copper-gold project in Ecuador.

The Polish government is working on amending tax laws, which could lead to tax deductions of up to five percent on certain minerals.

Major Brazilian mining company Vale will only make new investments in nickel if global prices rise to around $20,000 per ton, the firm’s chief executive said on Tuesday.

Aluminum ended up 0.4% at $2,034 a ton; zinc closed up 0.3% at $2,606; lead ended down 0.9% at $2,065.50; tin closed up 0.3% at $19,200; while nickel ended down 0.2% at $12,595. —