Copper ticks up on trade progress, but caution limits gains

• Copper's gains were limited, however, as U.S. and Chinese officials said much more work was needed before an accord could be agreed.
• The most-traded copper contract on the Shanghai Futures Exchange ended up 0.1pc at 46,970 yuan ($6,650.71).

SINGAPORE: Copper prices rose on Monday on signs of progress in U.S.-China trade talks and supply disruptions in parts of South America, but gains were capped by disappointing Chinese import/export data and caution about prospects for a final trade deal.

U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike on Oct. 15, raising hopes of an easing in the 15-month dispute that has hurt global growth and metals demand.

Copper was also supported by news that Chinese miner MMG Ltd  might halt production at its Las Bambas copper mine in Peru where protesters are blocking access to the site.

In Chile, operations at a copper mine belonging to Canadian miner Teck Resources Ltd will be suspended as workers start a strike on Monday and workers at small Antucoya, a small copper mine owned by Antofagasta Minerals, are also set to go on strike on Wednesday.

Copper's gains were limited, however, as U.S. and Chinese officials said much more work was needed before an accord could be agreed, while demand for the metal remained subdued.

The most-traded copper contract on the Shanghai Futures Exchange ended up 0.1pc at 46,970 yuan ($6,650.71), having risen as much as 0.6pc during Asian trading hours.

Benchmark copper on the London Metal Exchange (LME) was little changed by 0713 GMT, reversing an earlier 0.5pc rise.

"Despite the recent progress on the deal, trade tensions between China and the United States are unlikely to end completely and risks are likely to linger in the next phase of negotiations," ANZ analyst Soni Kumari said.

"Against such a backdrop, the market will be considering (China's) upcoming hard economic data more seriously than news on the trade deal," Kumari added.

FUNDAMENTALS

CHINA TRADE: China's unwrought copper imports in September stood at 445,000 tonnes, while the country exported 435,000 tonnes of unwrought aluminium and aluminium products in the same month.

Kumari said weaker imports of primary copper reflected subdued activity in the manufacturing sector, while weaker aluminium exports were due to narrowing margins and better availability of the metal outside of China. "Weaker industrial activities are impacting the demand for (aluminium) as well," he added.

CHINA: A slide in China's exports picked up pace in September while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the trade war drags on.

YUAN: Progress in the trade talks helped the yuan strengthen, making U.S. dollar-priced metals cheaper for holders of the Chinese currency, potentially boosting demand for LME base metals.

CHINA OUTPUT: September refined copper cathode output by 22 Chinese smelters rose 1.7pc month-on-month to 737,000 tonnes, while refined zinc and zinc alloy production increased by 1.5pc in September from the previous month to 453,000 tonnes, research house Antaike said.

PRICES: LME aluminium fell 0.1pc, tin advanced 0.7pc while nickel was down 1.4pc and lead  declined 1.5pc. In Shanghai, tin rose 0.6pc while aluminium decreased 0.7pc and zinc fell 0.3pc.