Copper prices rose on Tuesday on bargain buying after having tumbled to a 15-week low in the previous session on heightened trade tensions between Beijing and Washington.
China said on Monday it would impose higher tariffs on most U.S. imports on a revised $60 billion target list, hitting back at a U.S. tariff increase on $200 billion worth of Chinese goods, just days after markets were expecting a trade deal.
Benchmark copper was up 0.7% at $6,049.50 a tonne, as of 0747 GMT, rebounding from a 15-week low hit in the previous session. Lead also rebounded from a 33-month low hit on Monday to rise 0.5%.
“The selloff has been a little overdone so I suspect there’s a bit of opportunistic buying. But the upside is limited for the moment until there is some sort of clarity around the trade agreement between the U.S. and China,” said Daniel Hynes, a senior commodity strategist at ANZ.
The premium of cash zinc over the 3-month contract MZN0-3 hit its highest since 1997 of $141 on Monday, signalling a lack of nearby supply. “Some (Chinese) smelters are still under utilised. Output is beginning to increase month on month but it’s still not efficient for the market,” said CRU’s analyst Dina Yu based in China.
The zinc market is further stressed ahead of the expiry of the prime prompt date this week, with a dominant position holder of LME zinc warrants, LME data shows. <0#LME-WHL>
However, zinc prices in the second half of 2019 are expected to drop as Chinese smelters’ output will increase further in the second half of this year. Meanwhile, the U.S.-China trade war will hurt demand, CRU’s Yu said.
* COPPER STOCKS: Copper inventories in warehouses approved by the London Metal Exchange (LME) MCUSTX-TOTAL on Friday hit 203,750 tonnes, its lowest since April 25, latest data showed.
* COPPER DEFICIT: The copper market should see a deficit of 189,000 tonnes this year, widening to 250,000 tonnes in 2020, the International Copper Study Group said on Monday.
* NICKEL WEST: Global miner BHP Group will keep its Nickel West operations in Australia amid increasing demand for materials used to make batteries, its chief executive said.
* PRICES: Three-month aluminium on the LME rose 0.8%, nickel edged up 0.1%, zinc advanced 0.9% and tin increased 0.2%.
* SHANGHAI: All base metals in Shanghai dropped, with the most-active copper contract closing down 0.5% at 47,490 yuan ($6,903.12) a tonne.
* TRADE TALKS: China and the United States both have the “ability and wisdom” to reach a trade deal that is good for both, China’s top diplomat said, as U.S. President Donald Trump said he thought recent talks in Beijing would be successful.