Copper rebounds, shrugs off deepening trade row

LONDON — Copper prices rallied on Tuesday as investors shrugged off new tit-for-tat tariffs by China and the United States to send stock markets higher and the dollar lower.

Fears that a US-China trade war would dampen demand for commodities have pushed industrial metals sharply lower in recent months, with copper down 17% from a June high.

But with investors already braced for tariffs, copper was supported by the unexpected resilience of global share prices and non-US currencies and expectations that stimulus in China, the largest metals consumer, will underpin demand.

“The negative effects of any tariffs and any falling demand in China (as a result) are being effectively countered by increased infrastructure spending,” BMO Capital Markets analyst Kash Kamal said, adding that the tariff decision “was baked in.”

Benchmark copper on the London Metal Exchange (LME) closed up 2.4% at $6,087 a ton after touching a 14-month low of $5,733 last month.

Copper broke above its recent downtrend line coming in at around $6,040.

China said it would levy tariffs on about $60 billion worth of US goods after President Donald Trump said he was imposing 10% tariffs on about $200 billion worth of Chinese imports and threatened duties on about $267 billion more.

The tariffs did not include rare earth elements.

Global share markets rose, with China’s blue-chip CSI300 index adding two percent thanks to a rally in infrastructure stocks.

The dollar, meanwhile, hit its weakest since late July against a basket of major peers, supporting dollar-priced metals by making them cheaper for buyers with other currencies. China’s yuan was steady against the greenback.

MMG revised guidance for 2018 copper concentrate production at its Las Bambas mine in Peru to 375,000-395,000 tons from 410,000-430,000 tons.

LME zinc closed up 1.3% at $2,349 a ton, rebounding from Monday’s near two-year low but butting up against its downtrend line at around $2,380.

The global zinc market deficit deepened to 32,500 tons in July from 14,200 tons in June, data from the International Lead and Zinc Study Group (ILZSG) showed.

The premium of three-month LME zinc over the cash contract at $23 was the highest since April last year.

LME aluminum finished up 0.2% at $2,035 a ton; nickel ended 1.1% higher at $12,400; lead gained 0.1% to $2,074.50; and tin closed down 0.3% at $18,975. —