LONDON: Copper prices eased on Wednesday, breaking four sessions of gains, weighed down by uncertainty about potential tariffs on the world’s biggest metals consumer China and a buoyant dollar.
Three-month copper on the London Metal Exchange (LME) fell 0.4% to $8,964 per metric ton in official open-outcry trading. LME copper had bounced for four trading days after touching a five-month low of $8,757 last week. “The market is really trying to understand how aggressive these potential tariffs could be and I think the problem is no one really knows the answer,” said Nitesh Shah, commodity strategist at WisdomTree.
Many investors were on the sidelines after conflicting reports about plans by US President-elect Donald Trump regarding tariffs. During the campaign Trump vowed to impose tariffs of 60% on Chinese imports, but Trump on Monday denied a Washington Post report that said his aides were exploring plans that would only cover critical imports. Weak Chinese economic growth was also a persistent concern. “For all of China’s promises of stimulus in the final quarter of last year, very little action has come to play and you can see in the economic performance numbers,” Shah added.
A firmer dollar index, boosted by strong US data, also weighed on metals markets, making commodities priced in the US currency more expensive for buyers using other currencies. A bright spot for copper was a firm Yangshan copper premium, which reflects demand for copper imported into China. It was last at $70 per ton, up from $43 two months ago. LME zinc was the worst performer, sliding 1.3% to $2,838 a ton, having touched its weakest in nearly four months.
Alastair Munro, senior base metals analyst at Marex, said the weakness was largely due to selling linked to index rebalancing flows, a five-day monthly process that kicked off on Wednesday. Among other metals, LME aluminium dropped 0.7% in official activity to $2,501 a ton, nickel eased 0.2% to $15,375, lead dipped 0.1% at $1,953.50 while tin added 0.5% to $30,100.
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