Copper rose after five straight days of losses as a dollar rally paused, but gains were firmly capped by persistent fears over escalating trade tensions between the United States and top metals consumer China.
A public comment period on the possibility of fresh US tariffs on another $US200 billion of Chinese goods ends on Thursday, with expectations that the additional levies will be imposed by US President Donald Trump.
The dollar has benefited from these tensions, though it slipped on Wednesday, off a two-week high hit in the previous session, making dollar-priced metals less costly for non-US investors.
‘The metals complex is focusing on how trade wars damage demand and that’s why prices are largely falling, but trade wars will do more to disrupt supply chains than to hurt demand,’ said Nitesh Shah, commodities strategist at ETF Securities.
‘The cost of bringing (metals) into the United States is rising, so that’s price positive for metals (there). Equally for China or Europe who are applying higher tariffs, they also face higher (metals) costs.’
Three-month copper on the London Metal Exchange ended up 1 per cent at $US5,871 a tonne on Wednesday, having lost 2.5 per cent in the previous session.
A London-based trader said metals had recovered thanks to a lack of further dollar strength, little follow-through selling overnight, short covering and consumer buying after holidays. A second London-based trader said some selling pressure had been relieved after an options expiry.
Stainless steelmaking ingredient nickel closed down 0.2 per cent at $US12,450 a tonne, having hit its lowest since January, while zinc, used to galvanise steel, ended up 0.1 per cent at $US2,419.50, having hit a two-week low.
The most active steel rebar future on the Shanghai Futures Exchange notched up its ninth day of losses out of the past 11 sessions as worries lingered about slowing demand in the world’s top producer.
Alcoa’s alumina production has likely been hit by a four-week strike at its Western Australian operations, the Australian Workers’ Union said, raising the prospect of a widening supply deficit in the key aluminium-making ingredient.
Lead closed down 1.4 per cent at $US2,048.50 a tonne, tin ended flat at $US18,825, while aluminium ended up 0.3 per cent at $US2,068. The second London-based trader cited bearish sentiment overall in aluminium, saying the metal was being chased up on short covering.