LONDON: Copper prices dropped modestly on Tuesday after incoming U.S. President Donald Trump provided details of proposed tariffs on top metals consumer China, which were lower than expected.
Three-month copper on the London Metal Exchange (LME) was down 0.3% at $9,019 per metric ton by 1030 GMT, paring losses after touching an inter-day low of $8,958.
On Monday, Trump pledged an additional 25% tariff on all products from Mexico and Canada from his first day in office, and 10% tariffs on goods from China.
He has previously pledged to end China’s most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60% - much higher than those imposed during his first term.
“Trump’s message is pretty strong and the market obviously doesn’t like it, but the 10% on China was lower than what the market might have feared,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
The most-traded January copper contract on the Shanghai Futures Exchange (SHFE) closed down 0.3% to 73,740 yuan ($10,162.48) a ton.
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China’s peak demand season, which spans November and December, has also prevented a further decline in copper prices, with SHFE inventories falling and import premiums rising to a one-month high of $53 a ton.
On wider markets, the dollar rallied while European shares fell in the aftermath of Trump’s announcement.
The dollar index pulled back from its gains and was virtually flat in mid-morning European trading.
A stronger dollar usually weighs on commodities priced in the U.S. currency, making it more expensive for buyers using other currencies.
LME copper has shed 12% since hitting a four-month peak on Sept. 30.
“Copper looks somewhat challenged, it’s trading near the low end of its recent range and the risk at this point is for some additional weakness,” Hansen said.
Zinc was the only LME metal in positive territory, jumping 2% to $3,079 a ton after holders of LME inventories gave notice they wanted to remove over 50,000 tons of material, cutting the amount of available stocks by a fifth.
LME aluminium fell 1.2% to $2,621.50 a ton, nickel shed 0.6% to $16,100, lead was down 0.7% at $2,015 and tin dipped 0.1% to $28,950.
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