Most industrial metals prices have fallen while and copper hit a three-week low after the arrest of a top Chinese executive in Canada dampened hopes for a resolution to the US-China trade conflict.
The arrest of tech giant Huawei’s finance chief for extradition to the United States cast doubt over a 90-day trade truce struck on Saturday between the US and Chinese presidents, Donald Trump and Xi Jinping.
It sent global stock markets sharply lower, and hit metals because investors fear tariffs will curtail China’s demand for commodities.
Benchmark copper on the London Metal Exchange ended 1.7 per cent down at $US6,070 a tonne after touching its lowest since November 14 at $US6,068.
The Huawei arrest had combined with a plunge in oil prices to turn investors negative on metals, said Capital Economics analyst Ross Strachan.
‘The optimism in the markets at the beginning of the week evaporated extremely quickly,’ he said.
Healthy supply-demand fundamentals, however, meant copper was unlikely to fall much further, he added, predicting a price of $US6,250 a tonne at the end of 2019.
China’s economy is showing signs of cooling, with export growth expected to have slowed in November.
Despite the Huawei arrest, China expressed confidence in striking a trade deal with the United States within their 90-day ceasefire period.
Oil fell more than four per cent in choppy trading after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter the next day.
Strong foreign demand drove an unexpected rise in German industrial orders in October.
Copper has fallen below its 50 and 100-day moving averages, worsening its technical picture.
In a sign of tight supplies that should support prices, headline stocks of copper in LME-registered warehouses fell to 124,950 tonnes, down from almost 400,000 tonnes in March and the lowest since 2008.
SPREAD: The premium for cash copper over the three-month contract rose to $US9.50 from zero on Wednesday, suggesting less availability of nearby metal, but it is still down from $US44 in late November.
The top Democrat on the Senate Foreign Relations Committee urged the Trump administration not to waive or remove sanctions on Russian billionaire Oleg Deripaska or companies, including aluminium producer Rusal, that he controls.
LME aluminium closed 1.7 per cent down at $US1,936 a tonne, zinc ended down one per cent at $US2,593, nickel fell 3.3 per cent to $US10,850, tin finished 1.3 per cent lower at $US18,925 and lead eked out a meagre gain of 0.1 per cent to $US1,984.