LONDON: Copper and other base metals prices rebounded sharply on Thursday along with other risk assets after most US tariffs were paused for 90 days.
Some investors were wary about the rally, however, since US President Donald Trump doubled down in the trade war with top metals consumer China. Benchmark three-month copper on the London Metal Exchange (LME) gained 4.3% to $8,981 per metric ton in official open-outcry trading. Volatile LME copper tumbled as low as $8,105 a ton on Monday, down from a peak of $10,164.50 touched on March 26, its highest in more than nine months.
Trump paused for 90 days most of the hefty duties he had just imposed on dozens of countries, giving a shot in the arm to financial markets, but he boosted tariffs on Chinese imports to 125% from the 104% level that kicked in on Wednesday.
“This is just a typical financial market knee-jerk reaction,” said analyst Carsten Menke at Julius Baer in Zurich. “But from an industrial metals perspective, the elephant in the room is the relationship between the US and China, and we haven’t seen any improvement on that front.”
US importers have pre-bought Chinese goods in recent months anticipating tariffs, so there will be a hangover, he added. “Your purchasing manager at Walmart will say we are fully stocked, especially if we don’t know where our own economy is heading. So I think we are in for a softer demand backdrop in terms of the industrial metals over the next few months.”
The most-traded copper contract on the Shanghai Futures Exchange (SHFE) gained 3.9% to 75,300 yuan ($10,254.66) per ton, bouncing from an eight-month low hit on Wednesday.
Data on Thursday provided further evidence of a shaky Chinese economy, as consumer prices fell for the second straight month in March while factory-gate deflation worsened.
Among other metals, LME aluminium advanced 3.1% to $2,387 a ton, nickel surged 5.4% to $14,840, zinc climbed 3.1% to $2,638, lead gained 2.6% to $1,890 and tin jumped 3.9% to $30,995.
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