Copper recovers after upbeat Chinese comments on trade deal

• Market sentiment soured this week on fears of a further delay in the signing of a "phase one" deal.
• President Xi Jinping said on Friday that China wants to work out an initial trade pact with the United States.

LONDON: Copper rebounded on Friday after comments by the Chinese president raised hopes that a trade deal would be struck with the United States.

President Xi Jinping said on Friday that China wants to work out an initial trade pact with the United States and has been trying to avoid a trade war.

"With the latest soothing comments and invitation for further talks, the market is once again erring on the side of believing that a trade deal can still be struck," Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"We remain pretty sceptical about the potential impact of a deal. If it doesn't really deliver on all counts then we could see some more weakness."

Three-month copper on the London Metal Exchange had gained 0.5pc to $5,858 a tonne by 1115 GMT after ending 0.8pc lower in the previous session.

A key level to watch was $5,800, which if broken would open the way for losses to $5,600, the bottom of the recent range, Hansen added.

Market sentiment soured this week on fears of a further delay in the signing of a "phase one" deal, with two U.S. legislations backing protesters in the Chinese-ruled city of Hong Kong adding to concerns that talks could flounder.

LME COPPER STOCKS: LME copper inventories fell to 218,925 tonnes, the lowest since June 10, data showed on Friday.

ALUMINIUM SPREAD: The premium of LME cash aluminium over the three month contract rose to $13.50 a tonne, the highest since Dec. 31 last year.

That compares with a discount of $33.25 in mid-September.

The rising premium indicates tightness in near-term supplies in the LME system.

RARE EARTHS: China will accelerate the launch of futures contracts for rare earths, used in devices such as mobile telephones and batteries, a Shanghai Futures Exchange official said.

COPPER: Rio Tinto faces renegotiating the terms of an agreement underpinning its Mongolian copper mine project, after lawmakers on Thursday approved plans to revise the deal to make it more beneficial for Mongolia.

NICKEL: The global nickel market deficit widened to 3,200 tonnes in September from a revised shortfall of 300 tonnes the previous month, the International Nickel Study Group said.

PRICES: Aluminium rose 0.2pc to $1,737 a tonne, zinc  edged down 0.04pc to $2,294, nickel shed 1.2pc to $14,305, lead rose 0.2pc to $1,962.50 and tin dipped 0.2pc to $16,400.