Copper prices fell on Wednesday after industrial output growth in China, the largest metals consumer, fell to a more than 17-year low, weakening the outlook for demand. Benchmark copper on the London Metal Exchange (LME) ended down 1.1% at $5,765 a tonne, nearing a two-year low of $5,640 reached earlier this month.
Copper had risen on Tuesday after US President Donald Trump said he would delay new tariffs on Chinese imports, raising hopes that an economically damaging trade dispute could de-escalate. But the Chinese data, a downbeat assessment of the state of US-China negotiations by US Commerce Secretary Wilbur Ross and figures showing Germany's economy contracted in the second quarter revived the bearish mood.
"The global economic outlook is still negative," said Saxo Bank analyst Ole Hansen. "We need the trade war to be abandoned for the market to get an injection of optimism." Copper exports from Peru's port of Matarani have restarted after several weeks of suspension as anti-mining protests blocked key infrastructure.
A Reuters poll showed the Chinese yuan - which has weakened around 5% to the dollar since April - will fall further beyond the current 7 per dollar rate over the coming year. A weaker yuan pressures dollar-priced metals by making them more expensive for Chinese buyers.
China issued a third batch of quotas for imports of recently restricted types of scrap metals, including another 87,680 tonnes of high-grade copper scrap. Chinese primary aluminium output fell on a daily basis in July from the month before, according to Reuters calculations based on official data.
The country's monthly crude steel output also fell for a second straight month in July, official data showed. LME nickel finished up 0.2% at $15,950 a tonne, near a 16-month high of $16,690 reached on Aug. 8 on the back of speculation that top ore supplier Indonesia will soon restrict exports.
Indonesia's President will make the final decision on whether an export ban on mineral ore due to come into force in 2022 will be brought forward, the minister in charge of mining said on Tuesday.
Brokers Marex Spectron said speculative investors as of Monday held a net short position in LME copper equal to 8.6% of open contracts and a net long in LME nickel of 10.4% of open contracts - the highest since June last year.
LME aluminium closed down 0.6% at $1,775 a tonne, zinc fell 2.7% to $2,256, lead slid 1.3% to $2,041 and tin ended up 0.2% at $17,125.