Metals slide on escalating trade war; consumers dip in

Industrial metals tumbled on Wednesday, with copper, zinc and lead sinking to the lowest in about a year as speculators unleashed selling on the back of a further escalation in the US-Chinese trade conflict. Prices bounced off their lows, however, as some consumers scrambled to lock in prices they regarded as good value after heavy recent losses.
"Shanghai (Futures Exchange) is down even more aggressively today. It seems pretty clear that's where the momentum initiated, but it's been pretty broad across the board," said Oliver Nugent, commodities strategist at ING Bank in Amsterdam.
"I think we're seeing a decent amount of consumer interest at these levels. Our view is that there's a good chance that a (trade) deal could be sought, particularly after the November midterms (US elections). If you are of that conviction, this could represent a substantial dip buying opportunity."
China accused the United States of bullying and warned it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10 percent tariffs on $200 billion of Chinese goods. Metals fell the most among commodities, with nickel, tin and aluminium dropping to multi-month lows.
Three-month copper on the London Metal Exchange dropped as much as 4 percent to $6,081 a tonne, its lowest since July last year, before recovering by the close of open outcry trading to $6,145, down 2.9 percent.
Zinc dropped by its 6 percent downside limit in Shanghai to 20,620 yuan per tonne, the lowest since June last year.
LME zinc fell as much as 4.8 percent to $2,503, the lowest since June 2017, before paring losses to end at $2,563, off 2.6 percent.
LME lead failed to stabilise after its bounce, deepening losses just before the close to end 4.9 percent weaker at $2,200 a tonne, the lowest since June last year.
Nickel, mainly used in stainless steel, got scant support after Chinese steel futures rose when the country's biggest steelmaking city, Tangshan, said it would deepen output curbs over the summer, raising concerns of tight supplies in the market.
LME nickel bounced to finish at $13,880 a tonne, a 1.9 percent drop, from a two-month low of $13,570.
"Our speculative positioning estimates see nickel as the one remaining long across the complex at 2.8 percent of open interest ... albeit down from the June peak of 33 percent," Alastair Munro of broker Marex Spectron said in a note. Aluminium fell 1.4 percent to close at $2,060 a tonne while tin shed 2 percent to $19,375.