Copper slips on trade tensions, others firm on surprise China PMI rise
China official factory PMI rises to 51.3 in August, Copper set for 4% monthly drop
Industrial metals prices were mixed on Friday as an unexpected boost in China's manufacturing sector was offset by more trade tensions between the world's two largest economies.
Copper, nickel and tin slipped while aluminium, zinc and lead were in the black. Some metals were pressured along with global share markets after a report that U.S. President Donald Trump has told aides he is ready to impose tariffs on $200 billion more in Chinese imports.
"But the waters were muddied by the fact that the Chinese official PMI ticked up in August rather than falling," said Robin Bhar, head of metals research at Societe Generale in London.
The official factory Purchasing Managers' Index in top metals consumer China rose to 51.3 in August, surprising investors after analysts surveyed by Reuters had forecast it would dip slightly for a third straight month to 51.0. Copper has recovered from a 15-month low of $5,773 a tonne touched on
Aug. 15, but is still a long way off its 2018 peak of $7,348 hit in early June. On Friday, benchmark copper on the London Metal Exchange fell for a third straight session and was down 0.6 percent at $6,031 a tonne at 1405 GMT. LME copper is on track for a 4 percent drop in August, after a 4.9 percent slide in July.
"In the short term, we are going into Q4, which is seasonally stronger. But how far can the rebound go when you've got all these worries about trade tensions?" Bhar said.
"And are we going to get headwinds from the fact that Chinese and global growth may have peaked and are now slowing?"
Copper premiums: Copper has been supported by robust Chinese import premiums for physical metal at about $84 a tonne, down from last weeks near two-year high of $86 a tonne.
Inventories: Copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) fell 5.9 percent from the previous week, while on-warrant LME copper stocks declined 4,600 tonnes to the lowest levels in about a year, data showed on Friday last week.