Copper prices rallied as investors shrugged off new tit-for-tat tariffs by China and the United States to send stock markets higher and the dollar lower.
Fears that a US-China trade war would dampen demand for commodities have pushed industrial metals sharply lower in recent months, with copper down 17 per cent on Monday from a June high.
But with investors already braced for tariffs, copper was supported by the unexpected resilience of global share prices and non-US currencies and expectations that stimulus in China, the largest metals consumer, will underpin demand.
‘The negative effects of any tariffs and any falling demand in China (as a result) are being effectively countered by increased infrastructure spending,’ BMO Capital Markets analyst Kash Kamal said, adding that the tariff decision ‘was baked in.’
Benchmark copper on the London Metal Exchange closed up 2.4 per cent overnight at $US6,087 a tonne after touching a 14-month low of $US5,733 last month.
Copper broke above its recent downtrend line coming in at around $US6,040.
China said it would levy tariffs on about $US60 billion worth of US goods after President Donald Trump said he was imposing 10 per cent tariffs on about $US200 billion worth of Chinese imports and threatened duties on about $US267 billion more.
The tariffs did not include rare earth elements.
Global share markets rose, with China’s blue-chip CSI300 index adding two per cent thanks to a rally in infrastructure stocks.
MMG revised guidance for 2018 copper concentrate production at its Las Bambas mine in Peru to 375,000-395,000 tonnes from 410,000-430,000 tonnes.
LME zinc closed up 1.3 per cent at $US2,349 a tonne, rebounding from Monday’s near two-year low but butting up against its downtrend line at around $US2,380.
The global zinc market deficit deepened to 32,500 tonnes in July from 14,200 tonnes in June, data from the International Lead and Zinc Study Group (ILZSG) showed.
The premium of three-month LME zinc over the cash contract at $US23 was the highest since April last year.
LME aluminium finished up 0.2 per cent at $US2,035 a tonne, nickel ended 1.1 per cent higher at $US12,400, lead gained 0.1 per cent to $US2,074.50 and tin closed down 0.3 per cent at $US18,975.