Copper prices are up as worries about growth in top consumer China receded after a report that the country’s chief trade negotiator could visit the United States before a meeting between the two countries’ leaders.
Benchmark copper on the London Metal Exchange ended 0.4 per cent up at $US6,073 a tonne, down from a session high of $US6,181.
‘The panic about Chinese growth and the trade dispute is overdone. Credit conditions are beings loosened; which, though positive, will take time to feed through to activity,’ said Dan Smith, head of commodities research at Oxford Economics.
‘Volatility is going to remain pretty high because of all the political and economic uncertainty, but copper below $6,000 a tonne is cheap on a five-year view.’
China’s top trade negotiator Liu He could visit Washington to prepare for talks between US President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Argentina this month, the South China Morning Post reported.
China accounts for nearly half of global copper demand estimated at about 24 million tonnes this year.
Copper is widely used in power and construction and viewed by investors as a gauge of economic health.
China’s October copper imports fell 18.7 per cent from September to 423,000 tonnes, while those for the Jan-Oct period rose 17 per cent year on year to 4.41 million tonnes.
Stainless steel raw material nickel ended down 0.3 per cent at $US11,345 a tonne, having earlier touched an 11-month low of $US11,255 on weak fundamentals.
‘Our base case had expected prices to trade at 90th percentile next year – average at $US14,375 a tonne – but unless tightness materialises … there is limited economic reason for marginal nickel producers not to be cash negative,’ Citi analysts said in a recent note.
‘Since 2012, and as nickel pig-iron output has grown its share, prices have tracked closer to the 75th percentile.
‘At current costs this would suggest prices find support around $11,500 a tonne.’
The premium for cash zinc over the three-month contract at a one-year high of $US67 a tonne is because a few firms hold substantial amounts of LME zinc warrants, fuelling worries about shortages on the LME market, traders said.
The other problem, traders say, is that buyers of physical metal are looking for better quality zinc than they are being offered.
Zinc closed 0.3 per cent lower at $US2,489 a tonne.
Aluminium slipped 0.4 per cent to $US1,935.5 a tonne, lead gained 1.2 per cent to $US1,952 and tin was little changed at $US19,270.