LONDON: Copper slumped to the weakest in more than two weeks on Friday, weighed down by worries about a trade war in retaliation to fresh US tariffs, which could hit economic growth in top metals consumer China and elsewhere in the world.
Three-month copper on the London Metal Exchange (LME) shed 0.4% to $9,354.50 a metric ton by 1700 GMT, its weakest since February 12. It was set for a 2% weekly decline.
US Comex copper futures dropped 1.6% to $4.55 a lb. US President Donald Trump on Thursday threatened to slap an extra duty of 10% on imports from China in addition to a tariff of 10% levied on February 4.
Trump also said his proposed 25% tariffs on Mexican and Canadian goods would take effect on Tuesday, disappointing some investors hoping for a delay. “There’s not a huge amount of clarity, but the tariffs could be cumulative, and I think the working assumption is yes,” said Nitesh Shah, commodity strategist at WisdomTree.
“The aluminium and steel tariffs, are they on top of what’s already applied on Canada and Mexico? If so, you’re talking about 35% tariffs on aluminium, which is pretty punitive.” “So I think a lot of metals are suffering as a result.” Trump has imposed 25% tariffs on steel and aluminium, while Canada supplies the bulk of US imports of the latter.
Concern about an escalating trade war sent a chill through wider financial markets, sending the dollar to near multi-week highs. A strong dollar makes commodities priced in the US currency more expensive for buyers using other currencies. Investors were also eyeing China’s National People’s Congress meeting scheduled for March 5. “China is pretty much playing the same strategy for the last three years now.
It’s very much piecemeal stimulus, nothing massively game-changing,“ Shah said. Weak demand was reflected in a further rise in copper inventories in warehouses monitored by the Shanghai Futures Exchange, adding 3.2% over the past week to the highest in six months. LME tin dropped 1.7% to $31,155 a ton after news emerged that Myanmar’s Wa State is considering allowing mining to resume in the tin-rich region. Myanmar is the world’s third-largest producer. The discount of LME cash nickel to the three-month contract declined sharply to $174 per ton, the weakest in nine months, compared to a discount of $220 last week. Among other metals, LME three-month nickel slid 2.5% to $15,440 a ton, aluminium eased 1.1% to $2,604, zinc shed 0.5% to $2,794 and lead gave up 0.8% to $1,992.
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