Copper prices have touched one-week highs as investors bought on expectations the escalating trade dispute between China and the United States would not undermine flows of metal.
Benchmark copper on the London Metal Exchange ended up 1.2 per cent at $US6,796 a tonne from an earlier high at $US6,828.
China on Sunday announced tariffs on $US3 billion in imports of US food and other goods in response to US tariffs on imports of aluminium and steel.
‘China’s response wasn’t as aggressive as some investors were thinking,’ said Commerzbank analyst Eugen Weinberg.
‘That suggests the impact on China’s metal imports is unlikely to be dramatic. After the recent price drop investors are seeing some value.’
TARIFFS: The United States is this week expected to announce tariffs on $US50 billion to $US60 billion of Chinese imports following an investigation under Section 301 of the 1974 US Trade Act.
PROTRACTED: ‘Over the course of April, we think investors will come to the conclusion that the trade issue is going to be protracted and complicated and will likely be ‘defanged’ as it plods along,’ INTL FCStone analyst Edward Meir said in a note.
‘Having fired off the initial round of tariffs, both China and the US will now engage in serious talks in an attempt to lower the temperature. As a result, the panic that seems to be hitting the markets every time the trade issue is brought up will likely subside.’
STOCKS: Traders expect higher inventories of copper, up 20 per cent at 383,025 tonnes since March 22, in LME approved warehouses to cap price gains.
TECHNICALS: Upside resistance for copper prices is at $US6,830, near the 21-day moving average. Support is at $US6,700, near the 200-day moving average.
ZINC: Concern about the nearby availability of zinc on the LME market due to one company holding between 50 and 79 per cent of warrants has created a premium of $US12 a tonne for the cash contract over the three-month forward. Three-month zinc gained 0.2 per cent to $US3,280.
NICKEL: Prices rose 1.3 per cent at $US13,475 from an earlier two-week high at $US13,660. Nickel’s gains have been fuelled by falling stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE).
RESISTANCE: A break of key resistance at $US13,450, where the 21-day and 55-day moving averages met, triggered a flurry of nickel buying by funds.
ALUMINIUM: Prices ended 1.3 per cent lower at $US1,978, their lowest since August last year, partly due to record high stocks above 970,000 tonnes in ShFE warehouses.
PRICES: Lead fell 0.2 per cent to $US2,391.5 a tonne and tin was untraded at the close, but bid up 0.4 per cent to $US21,150.