Copper rises on prospect of trade talks between US and China

LONDON: Copper rose to its highest level in two weeks on Thursday after China said it welcomed an invitation by the United States to hold a new round of trade talks.

The world's two largest economies have imposed tariffs on $50 billion of each other's goods in a row that has raised fears that demand for industrial metals will weaken.

Washington is preparing to install further tariffs on $200 billion worth of Chinese goods.

"There is at least some optimism as long as the US is going to negotiate, and it seems less likely that they will pull out the bazooka of punishing China with even more import duties," said Quantitative Commodity Research consultant Peter Fertig.

"But Trump could also tweet tomorrow that he's still determined to impose those tariffs on China even while the negotiations are ongoing and then the market will move onto the other side," he said.

Benchmark copper on the London Metal Exchange (LME)finished 0.6 percent higher at $6,033 per ounce, after touching its highest since Aug. 30 at $6,074.

STOCKS: On-warrant copper stocks available to the market in LME-registered warehouses fell 7,900 tonnes to 142,525 tonnes. They are down about 60 percent from their 2018 peak in March.

SHFE COPPER: The most-traded November copper contract on the Shanghai Futures Exchange finished up 2.2 percent at its highest close in two weeks.

COPPER PREMIUMS: China copper premiums have risen to $91 a tonne, the most since February 2016, in a sign of strong underlying demand for physical metal.

DOLLAR: The dollar rose against a basket of major currencies. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies, a relationship used by funds to generate buy and sell signals.

ALUMINIUM SPREADS: Cash to three-month LME prices are at a discount of $37.28 a tonne, close to the lowest levels since July 2015, as the market continues to expect US sanctions on Russia's Rusal to be delayed.

"We believe the spread could widen further if the current uncertainty on Rusal supplies continues," ING said in a note.

CHINA POLLUTION: China's smog-prone province Hebei said on Thursday it will ban blanket production cuts in heavy industry including steel, coke, non-ferrous, construction materials, carbon, chemicals and pesticide in the coming winter season.

PRICES: Aluminium ended mostly flat at $2,065 per tonne, zinc fell 0.4 percent to $2,360, lead finished 0.8 percent higher at $2,036, tin was broadly flat at $19,000 and nickel ended down 0.1 percent at $12,605.