LONDON: Copper prices fell on Tuesday as U.S. President Donald Trump slapped tariffs on China, Canada and Mexico, inflating fears that a trade war would affect global growth, but prices remained in a tight range as traders awaited more clarity.
Three-month copper on the London Metal Exchange (LME) slipped 0.7% to $9,351 a metric ton by 1049 GMT, falling below the 21-day moving average of $9,411.
Trump’s new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%.
China retaliated with hikes to import levies for American agricultural and food products, moving the world’s top two economies a step closer towards an all-out trade war.
“We have got two major things on the horizon,” said Dan Smith, head of research at Amalgamated Metal Trading.
“There is a prospect of a trade war, which is very bearish for the metals markets, and there is also a prospect of the Ukraine war settlement, which is bullish for the markets as a peace deal would improve confidence in the markets and remove the risk of the war spinning out of control for regions such as Europe.”
Copper pressured by US tariff threat, but China data supports
“People are struggling to trade those two prospects. Usually traders use the ‘buy the rumour, sell the fact’ strategy, but now they are ignoring the rumour and trade the fact,” Smith added.
Trump paused military aid to Ukraine following his clash with Ukrainian President Volodymyr Zelenskiy last week, according to a White House official. A Kremlin spokesman was cautious on reports of a pause in U.S. aid and said the details needed to be seen.
Further limiting reaction in the base metals was the start of China’s National People’s Congress (NPC) on Wednesday, coinciding with the renewed exchange of tariffs. Traders hope the NPC would announce additional stimulus to support the economy of the world’s top metals consumer.
LME aluminium fell 0.2% to $2,606 a ton, zinc lost 0.8% to $2,818.50, lead was steady at $1,991.50, nickel eased 0.1% to $15,870, while tin rose 0.7% to $31,73.
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