LONDON: Copper prices edged up after hitting their lowest in three weeks in London on Wednesday, but a strong dollar and fears that US President Donald Trump’s tariff plans could crimp the global demand outlook kept gains in check.
Benchmark copper on the London Metal Exchange (LME) rose by 0.2% to $9,006 a metric ton in official open-outcry trading after touching $8,957 for its lowest since Jan. 8. US Comex copper futures gained 0.4% to $4.2625 per lb, keeping the premium over the LME contract above $380 a ton.
Trump has said he would announce 25% tariffs on Mexico and Canada on Feb. 1 unless the countries help to tackle the twin issues of US fentanyl trafficking and immigration. On Monday he said he would impose tariffs on aluminium, copper and steel.
“There is currently a lot of uncertainty regarding tariffs in the US and potential retaliatory actions, particularly in China, and the market is highly reactive at the moment,” said Alice Fox, global metals strategist at Macquarie. “The introduction of tariffs could negatively impact global growth and therefore copper demand.”
Adding further pressure on base metals, the dollar strengthened ahead of the US Federal Reserve’s next policy decision, with investors looking for hints on how much interest rates might fall this year. A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies. In other metals, LME aluminium added 0.9% to $2,596 a ton in official activity.
The discount for the LME cash contract against three-month aluminium was last at $5.50 a ton, compared with $67 in July. BNP Paribas expects this spread to swing to a premium in the first half of 2025 as China’s production cap and limited capacity growth outside China tighten physical supply despite slower demand. Meanwhile, lead rose 1.5% to $1,964 a ton, tin was up 0.6% at $29,850, zinc lost 0.1% to $2,771 and nickel gained 0.1% to $15,450. The main markets in top metals consumer China are closed for the Lunar New Year holiday until Feb. 5.
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