Copper stabilizes; focus on US-China trade talks

LONDON — Copper held steady on Wednesday before high-level talks between China and the United States but low expectations for a swift end to the prolonged trade dispute kept prices in a tight range.

Benchmark copper on the London Metal Exchange (LME) ended up 0.1% at $5,684 a ton.

Prices of the metal used widely in power and construction fell to $5,518 early last month, the lowest since May 2017 on concern about demand in top consumer China.

“Trade talks will drive direction in the short term ... Some of the signals yesterday were not particularly encouraging,” said Deutsche Bank analyst Nick Snowdon.

“The macro picture will be the most important determinant, but we are seeing a tighter physical market in China, which will support prices,” he said.

US and Chinese officials are due to talk on Thursday and Friday in a bid to end a 15-month long trade dispute.

However, hopes of a resolution appeared low due to Washington imposing visa restrictions on Chinese officials for the detention or abuse of Muslim minorities.

A tighter copper market can be seen in bonded copper stocks in Shanghai, which at 290,000 tons are down from 600,000 tons in March and at their lowest since late 2011, Deutsche’s Mr. Snowdon said. He added that higher copper prices on the Shanghai Futures Exchange than on the LME meant Chinese imports would stay strong through the fourth quarter.

“Short term it’s a positive for prices but it’s come two quarters later than was originally expected, largely due to large China trader stock liquidation in April,” Mr. Snowdon said.

China’s new bank loans likely rose in September but other key gauges of credit growth remained lackluster, a Reuters poll showed, reinforcing expectations Beijing needs to deliver more support to stabilize the economy.

The lower US currency, which makes dollar-denominated metals cheaper for holders of other currencies, was fueling some buying by funds, which use the currency move to generate buy and sell signals from numerical models.

The premium for cash over the three-month nickel contract rising to $131 a ton during the Wednesday session indicates concern about availability on the LME market where stocks have been sliding.

Stocks of nickel in LME registered warehouses at 108,624 tons are down nearly 35% since Sept. 12.

Three-month nickel closed down 1.2% at $17,360 a ton.

Aluminum was down 0.4% at $1,744; zinc fell 0.3% to $2,291; lead lost 0.7% to $2,129.5; and tin gained 0.3% to $16,445. —