Copper rises on weaker dollar but trade war drags

LONDON — Copper rose on Friday, clocking its first weekly gain in four on a softer dollar, though worries about Chinese demand are expected to cap gains as the country’s trade dispute with the United States drags on.

Benchmark copper on the London Metal Exchange (LME) rose two percent to close at $6,105 a ton, up nearly three percent for its biggest weekly gain since early June.

The dollar index eased by 0.6% after Federal Reserve Chairman Jerome Powell defended the US central bank’s push to raise interest rates. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.

“It’s a dollar story again today, but from a demand point of view it is a little more constructive than it was a few weeks back,” said ING commodities strategist Warren Patterson. “The trade war is going to create volatility in the market but generally the trend should be higher metal prices.”

US and Chinese officials ended two days of talks on Thursday with no major breakthrough as their trade war escalated with activation of another round of duelling tariffs on $16 billion of each country’s goods.

The tariffs have sapped demand for metals this year.

China will keep retaliating as more US trade tariffs are imposed, but its counter-strikes will remain as targeted as possible to avoid harming businesses in China, both Chinese or foreign, Finance Minister Liu Kun told Reuters.

The discount for the cash contract to three-month copper has narrowed to $19 a ton from $42 last week because of worries about metal for nearby delivery on the LME market because of a rise in canceled warrants for delivery. Canceled warrants in LME-approved warehouses have risen above 100,000 tons for the first time this year, representing about 39% of LME copper stocks.

Traders say the canceled metal is heading for China because prices on the Shanghai Futures Exchange are about $7,150 a ton and the gap against LME prices is large enough to cover shipping, taxes and make a profit.

China copper import premiums are at $86 a ton, their highest since October 2017.

The price of lead rose to its highest since Aug. 14 at $2,086, on course for its best week in three months. Aluminum closed with a one percent gain at $2,095 a ton; zinc finished 2.7% up at $2,534; lead rose 1.5% to $2,085; tin ended 0.5% down at $18,995; and nickel added 1.1% to $13,415. —