Copper prices were stuck near a two-week low overnight as uncertainty over US-China trade talks injected pessimism into the demand outlook and stockpiles in London Metal Exchange (LME) warehouses jumped to the highest in a year.
Benchmark copper on the LME closed up 0.5 per cent at $US5,918 a tonne after slipping to $US5,840 – the weakest since June 18.
Investors fear protectionist trade policies will damage economic growth, weakening metals consumption.
Copper, used in power and construction, cost more than $US7,000 a tonne in June last year before US President Donald Trump began his trade dispute with Chinese authorities.
Hopes that talks over the weekend had put the two countries on a path to a deal were fading, said ETF Securities analyst Nitesh Shah.
“From a fundamental standpoint, things are pretty good (for copper) … If there weren’t question marks over demand, the metal would be doing very well,” he said.
Data this week showed factory activity shrank across much of Europe and Asia in June and slowed to near a three-year low in the United States.
In China, the world’s largest consumer of metals, the manufacturing PMI fell short of market expectations and was the worst since January.
Other figures on Wednesday from China, the euro zone, Britain and the United States reinforced a picture of weakening economies.
Expectations that central banks will battle slowing growth with easier monetary policy drove US stocks to a record high and gave some support to copper.
White House trade adviser Peter Navarro said trade talks with China were heading in the right direction but a deal would take time.
But Trump said on Monday any deal would need to be somewhat tilted in favour of the United States and a US official said Chinese company Huawei should still be treated as blacklisted.
Copper inventories in LME-registered warehouses jumped 32,575 tonnes to 272,500 tonnes, the highest in a year, suggesting a better supplied market.
LME tin ended up 3.5 per cent at $US18,310 a tonne after plunging more than six per cent on Tuesday to the lowest in three years.
“The overall pattern of weak supply and demand remains unchanged,” Citic Futures analysts said in a note, adding that Chinese tin smelters were losing money at these price levels.
LME inventories have risen from a record low below 1,000 tonnes in May to 6,410 tonnes, the highest in two years but far below peaks a decade ago.
LME cash tin has flipped from a more than $US300 premium to the three-month contract in May to a discount of $US7 on Wednesday, pointing to more plentiful nearby supply.
LME aluminium finished up 0.5 per cent at $US1,790 a tonne and nickel rose 2.1 per cent to $US12,350.
Zinc fell 1.2 per cent to $US2,449 and lead closed down 0.8 per cent at $US1,880.