Copper prices slipped, but held near 10-week highs hit last week as the market waited to see how the US-China trade dispute would develop after both countries imposed new tariffs on imports.
Benchmark copper on the London Metal Exchange traded down 0.7 per cent at $US6,320 a tonne in official rings.
The metal, seen as a gauge of economic health, hit $US6,382.5 on Friday, a gain of 4.62 per cent, the largest one-day rise since May 2013.
Friday’s rally was mainly due to tariff levels that were much lower than expected.
‘The market was fretting US tariffs could be as high as 25 per cent from the start,’ Societe Generale analyst Robin Bhar said.
‘It was a relief rally.’
‘Fundamentals are pretty sound, demand is strong.’
US tariffs on $US200 billion of Chinese goods and retaliatory tariffs by Beijing on $US60 billion of US products took effect on Monday.
The United States will levy tariffs of 10 per cent initially, rising to 25 per cent at the end of 2018.
Beijing has imposed rates of five to 10 per cent and warned it would respond to any rise in US tariffs on Chinese products accordingly.
Strong copper demand can be seen in stocks held by LME-registered warehouses, which at 214,350 tonnes are down more than 40 per cent since late March and near their lowest since January.
Cancelled warrants – metal earmarked for delivery and no longer available – stand at 32.5 per cent.
Worries about nearby tightness on the LME market have been reinforced by two large holdings – between 30 and 39 per cent – of copper warrants.
That has created a premium of $US16 a tonne for the cash over the three-month contract.
China accounts for nearly half of global copper demand estimated this year at 24 million tonnes.
Premiums for metal on the physical market in China are at $US122 a tonne, up nearly 40 per cent since August.
The US Treasury on Friday extended until November 12 a deadline for investors to divest holdings of debt, equity and other assets in sanctions-hit Russian companies EN+ and Rusal.
Expectations that sanctions on Rusal, a top aluminium producer, will be lifted after the US mid-term elections on November 6 are weighing on prices of the transport and packaging metal.
‘The extension suggests a softening and an eventual lifting of the sanctions,’ a source at a commodities trading firm said.
Aluminium was down 1.2 per cent at $US2,066, zinc gained 1.2 per cent to $US2,526, lead fell 0.3 per cent to $US2,033, tin fell 0.5 per cent to $US18,900 and nickel slid 1.3 per cent to $US13,075.