Prices of most industrial metals slipped after reports that the United States may be about to impose tariffs on another $US200 billion worth of Chinese goods.
An announcement from President Donald Trump is pending, with China already indicating it would retaliate.
The tit-for-tat dispute has led to concerns that demand for metals will weaken and is the key factor driving prices lower, said Societe Generale analyst Robin Bhar.
‘Fear (of more tariffs) is dominating the markets,’ he said.
Benchmark copper on the London Metal Exchange closed down 0.5 per cent at $US5,945, near a 14-month low of $US5,773 touched in August and down nearly 20 per cent from its June peak.
Speculators are betting that prices will fall further, with the net short in LME copper at 17 per cent of open interest, brokers Marex Spectron said. Investors have net short positions in all LME industrial metals, they said.
Stocks are falling despite signs of a tighter market, with copper inventories in LME-registered warehouses at 221,925 tonnes, the lowest since January.
Weak economic data in China has exacerbated demand fears.
China is the world’s largest consumer of industrial metals.
Low prices are, however, tempting bargain hunters. Chinese copper import premiums at $US96 a tonne are the highest since February 2016.
Chinese copper output rose to 749,000 tonnes in August, up 10.5 per cent from the same month last year. Production of other metals also rose, though zinc output fell.
US authorities said that buyers of aluminium from Russia’s Rusal before it was hit by sanctions in April could sign new contracts with the company but did not say whether there would be an extension to the October 23 deadline for US customers to wind down business with Rusal.
The premium of three-month aluminium over the cash contract is more than $US35. That is its highest since late 2015, partly because of concerns that supply could tighten if sanctions on Rusal are not lifted.
Philippines President Rodrigo Duterte repeated a call to shut all mines in the country after deadly landslides.
The Philippines is the world’s second-biggest supplier of nickel ore.
LME aluminium ended 0.5 per cent down at $US2,032 a tonne, zinc finished 0.6 per cent lower at $US2,320, nickel lost 3.1 per cent to $US12,260, lead closed up 1.6 per cent at $US2,072 and tin slipped 0.1 per cent to $US19,025.