Copper failed to respond positively on Friday to China boosting bank lending because the trade dispute between the biggest metals consumer and the United States still weighed on the market. China's central bank said it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126 billion) in liquidity to shore up the slowing economy.
The central bank, however, said there would be "no flood-like stimulus". "It comes on top of the last couple of days, where we saw the market recover quite strongly. It raises the question of how much further the market can rally at this stage while the trade war is still on," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. "Some additional stimulus measures had been expected, so I think that's probably adding to the lack of reaction."
Copper rebounded from a two-year low hit on Tuesday after the United States and China agreed to hold further trade talks to resolve a dispute that has weakened global growth and metals consumption. On Friday, a White House adviser said talks between US and Chinese trade negotiators could "heat up" during meetings in October.
Benchmark copper on the London Metal Exchange slipped 0.2% to $5,834 a tonne in final open outcry trading. Copper failed to break through its 50-day moving average at $5,841 this week, prompting speculators to hold back. "The downside pressure is not over, the downside risks are still concrete," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan. "Some shorts have covered, but not any big positions yet."
A break above the 50-day moving average would signal that the market was stabilising and may be poised for a new wave higher, he added. LME tin fell 0.4% to end at $17,375 a tonne, reversing after recent strong gains spurred by production cuts by some of the world's top refined tin producers following a recent slump in prices. Tin gained nearly 6% this week, its biggest weekly increase since March 2016.
LME nickel rose 1.1% to finish at $17,685. The net speculative long position on the LME reached 43% of open interest as of Wednesday's close, the highest since September 2017 when it peaked at 47%, Alastair Munro at broker Marex Spectron said in a note. LME zinc inventories fell to 65,625 tonnes, the lowest since April 12, daily data showed on Friday. LME zinc fell 0.6% to close at $2,328 a tonne, aluminium added 0.4% to $1,790.50 and lead gained 1.1% to $2,078.