Article Highlights

  • Copper shorts on LME at 8 pct of open interest -Marex
  • Colling China growth weighs on industrial metals
Partner Center Find a Broker

Copper steadied on Tuesday as the dollar slipped and equity markets recovered, but worries about global growth due to a trade spat between the United States and China are expected to keep prices near seven-month lows.

Benchmark copper on the London Metal Exchange was up 1.1 percent at $6,593 a tonne at 1117 GMT after hitting $6,519 on Monday, its lowest since Dec. 5.

Prices of the metal, used widely in power and construction, have tumbled more than 10 percent since June 7.

“LME metal prices have stabilized after consecutive days of sell-off,” said Xiao Fu, head of commodity markets strategy at BOCI Global Commodities, adding that tensions between China and the United States will keep markets volatile. “Fears have not dissipated and will likely capmetals prices.”

DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S.-firms, which potentially could mean stronger demand for metals such as copper.

This relationship is used by funds which trade using buy and sell signals generated by numerical models.

SHORTS: Data from Marex Spectron shows speculative short positions — bets on lower prices – on the LME at 8 percent of open interest as of Friday, levels last seen in Sept. 2016.

TRADE DISPUTE: U.S. President Donald Trump has this year sought to renegotiate some of the United States’ trading relationships, in particular with China. He has imposed tariffs on some imports, in turn sparking retaliatory action by other countries, raising fears of a global trade war.

DEMAND: China accounts for nearly half of global copper demand, estimated this year at around 24 million tonnes. The U.S. accounts for a smaller, but nevertheless significant 8 percent.

MANUFACTURING – Growth in China’s manufacturing sector cooled slightly in June as firms faced rising input costs and a decline in export orders amid an escalating trade dispute with the United States, a private survey showed on Monday. (nL4N1TY1QE)

CHINA GROWTH: “Somewhat softer economic growth in China – as evidenced by the slight fall in the unofficial PMI – can explain some of the weakness in industrial metals prices,” analysts at Capital Economics said in a note.

PBOC: China’s central bank moved to calm jittery markets after the yuan dropped through the psychologically significant 6.7 to the dollar mark, hitting its lowest in almost a year as anxieties over U.S. trade frictions deepened.

PRICES – Aluminium rose 1.4 percent to $2,128 a tonne, zinc added 0.4 percent to $2,834, lead gained 0.7 percent to $2,403, tin slipped 0.2 percent to $19,700 and nickel was up 0.9 percent to $14,685.