Copper jumps to 6-week high on Trump’s tariff delay; focus on ECB

Madiha Shakeel September 12, 2019

BEIJING: London copper prices hit a six-week high on Thursday after U.S. President Donald Trump agreed to delay hiking tariffs on $250 billion worth of Chinese goods by two weeks, while investors awaited news on a possible European Central Bank (ECB) rate cut.

The ECB will hold a meeting in Frankfurt on Thursday, where it is set to unveil fresh stimulus measures to prop up the ailing euro zone economy. Lower interest rates tend to push commodity prices higher because they mean lower inventory financing costs.

Copper, considered a bellwether for economic health, dived 17.7% in London in 2018 and has shed another 1.7% so far this year, weighed down by concerns that the Sino-U.S. trade war will hurt demand for industrial metals.

The discount of cash LME copper over the three-month contract <CMCU0-3> was last assessed at $33.75 a tonne, the biggest discount since May 22.

“The large contangos at the front of the curve seem to highlight how disappointing real demand is in the physical market,” Marex Spectron said in a note.

FUNDAMENTALS

* COPPER: Three-month copper on the London Metal Exchange rose as much as 2.2% to $5,898 a tonne, its highest since Aug. 1, and stood at $5,887.50 as of 0733 GMT. The most traded November copper contract on the Shanghai Futures Exchange closed up 0.6% on 47,490 yuan ($6,702.33) a tonne.

* NICKEL: LME nickel, which is up around 70% year-to-date, rose as much as 3% to $18,385 a tonne. The three-month nickel spread <CMNI0-3> was at $102 a tonne premium, just below the decade-high of $104 seen on Aug. 30. Shanghai nickel closed up 1% but open interest fell almost 3%, indicating short-covering ahead of the long weekend in China.

* SHFE: The ShFE will be closed on Friday for China’s Mid-Autumn Festival, reopening on Monday.

* SHFE STOCKS: Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 6.1% from last Friday to 152,188 tonnes, the exchange said on Thursday.

* NICKEL: Large mining companies on Wednesday welcomed a recent decision by the Indonesian government to move forward a ban on exporting nickel ore, as the firms aim to increase smelting output.

* OTHER METALS: The rest of the LME complex was mixed, with tin losing 0.8% and aluminium slipping 0.1%, whereas lead and sister metal zinc both edged up 0.1%.

MARKETS NEWS

* Asian stocks advanced to a six-week high on hopes for a thaw in U.S.-China trade relations and expectations that the European Central Bank would kick off another wave of monetary easing by global central banks.

 

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