Copper advances despite mixed U.S.-China trade expectations

• Traders and brokers said despite doubts about the outcome of U.S.-China trade talks set to begin on Thursday.
• Three-month copper on the London Metal Exchange (LME)  rose as much as 1.1pc to $5,749 a tonne.

SINGAPORE: Copper prices rose on Thursday following reports that the United States is weighing a currency pact with China and could suspend a tariff hike planned next week.

Traders and brokers said despite doubts about the outcome of U.S.-China trade talks set to begin on Thursday, the metals market was taking note of a Bloomberg report saying the White House plans to roll out a formerly agreed currency pact with China and to hold further talks.

Three-month copper on the London Metal Exchange (LME)  rose as much as 1.1pc to $5,749 a tonne, after falling 0.3pc amid reports suggesting a less optimistic outcome from the trade talks.

Copper prices on the Shanghai Futures Exchange (ShFE)  ended up 0.1pc to 46,700 yuan ($6,566.46) a tonne after spending much of Asian trading in negative territory.

Reuters reported China had lowered expectations for this week's trade talks after the United States blacklisted Chinese companies.

The South China Morning Post newspaper also reported that two sides had made no progress in deputy-level trade talks held on Monday and Tuesday.

"It's quite messy as we see news from both sides. People may see the direction of currency a signal of potentially positive outcome, and copper, a key indicator for an optimistic macro, also gained some attention," said a Singapore-based trader.

FUNDAMENTALS

LONDON PRICES: LME nickel rose 1.8pc by 0714 GMT, zinc advanced 2.3pc, lead increased 0.7pc, tin  edged up 0.1pc and aluminium was up 0.2pc.

SHANGHAI PRICES: Shanghai aluminium declined 0.4pc after touching a two-month low, lead fell 0.5pc, zinc  rose 0.9pc and nickel was up 0.5pc.

"We see the yuan has strengthened. Strong yuan benefits imports, which means increasing inflows of cargoes ...(leading to) more domestic supply, so LME (prices) go up and ShFE (prices) go down," said the trader.

ALUMINIUM: Shanghai aluminium prices have been outperforming LME prices due to a shortage in China as domestic supplies fall, a divergence expected to dominate for some time.

KCM SMELTER: Zambia's Konkola Copper Mines (KCM) smelter on Wednesday was shut down for annual maintenance two days earlier than planned after a leak, its provisional liquidator Milingo Lungu said.

CHINA: China's cabinet announced steps on Tuesday to ease growing fiscal strains on local governments, amid a push to cut taxes to support the slowing economy.

LAS BAMBAS: Operations at Las Bambas, one of Peru's largest copper minefields, are being affected by blocked roads disrupting supplies since Sept. 22 amid anti-mining protests, Chinese miner MMG Ltd said.