Copper prices slipped on Monday as Chinese import data reinforced worries about growth in demand for industrial metals fuelled by the ongoing US-China trade dispute, while a firmer dollar also weighed. Benchmark copper on the London Metal Exchange ended down 0.9 percent at $6,089 a tonne. Prices of the metal used in power and construction have mostly traded in a range between $6,000 and $6,400 since late September.
"The import data is a drag on sentiment though we knew China growth was slowing, we saw that in the PMIs. The truce between China and the United States is under scrutiny, so we wouldn't expect much upside," said Julius Baer analyst Carsten Menke. "Demand is neither strong or soft enough to push prices either way at the moment. The dollar is always important."
China's copper imports fell 3 percent in November from a year ago to 456,000 tonnes, but they were up 8.6 percent from October's number at 420,000 tonnes. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for November ticked up to 50.2 from 50.1 in October. The sub-index for new export orders shrank to 47.7 in November from 48.8 in October.
The arrest of Huawei's CFO by Canadian authorities on Dec. 1 at the request of the United States has roiled global markets due to concern it could torpedo attempts to thaw trade tensions between the United States and China. "We doubt the three months allocated to these discussions will be sufficient to adequately address all of the US's grievances," said INTL FCStone analyst Edward Meir in a note.
"They run the gamut from protecting US intellectual property rights, addressing the issue of 'forced' technology transfers, increasing foreign ownership rights, addressing commercial hacking concerns and a push to remove or reduce credit subsidies for Chinese state-owned enterprises." The firmer US currency makes dollar-denominated commodities more expensive for holders of other currencies. This is a relationship used by funds to generate buy and sell signals from numerical models.
Stocks of zinc in LME registered warehouses at 113,875 tonnes have halved since the middle of August to their lowest in more than 10 years. That combined with a large position holding between 80 and 89 percent of warrants and cash contracts has created nervousness about nearby availability on the LME market. This can be seen in the premium for the cash over the three-month contract rising to $125 a tonne last week. It was last around $94 a tonne. Three-month zinc fell 0.5 percent at $2,575 a tonne. Aluminium fell 0.9 percent at $1,937, lead slid 2.2 percent to $1,950, tin ceded 0.3 percent to $18,950 and nickel lost 1.0 percent to $10,800 a tonne.