Copper steady ahead of US-China trade talks, focus on tighter nearby supply

LONDON: Copper steadied on Friday ahead of US-China trade talks, with the market focused on tighter nearby supply, reflected in the premium for nearby copper contracts against those further out hitting a 2-1/5 half-year high.

Benchmark three-month copper on the London Metal Exchange (LME) was unchanged at $9,432 a metric in official open-outcry trading. US President Donald Trump said that 80% tariffs on Chinese goods “seems right” as representatives prepared for weekend talks to contain a trade war between the world’s two largest economies which poses long-term risks to global metals demand.

In the short term, the trade spat and a separate investigation in Washington on whether to impose new copper import tariffs have been reducing the availability of copper on the Shanghai Futures Exchange (SHFE) and within the LME system by attracting more metal into the COMEX-owned warehouses. “The overall tightening in copper’s fundamentals can been seen with widening backwardations for near-month contracts on the LME and SHFE,” said Natalie Scott-Gray, senior metals analyst at StoneX.

This tightness is temporary and will not offset the wider implications of a long-lasting US-China trade war, she added. As outflows to the US coincided with the seasonal growth of demand in China, copper inventories in SHFE-monitored warehouses have been falling faster than originally expected in recent weeks. These stocks fell 9.6% this week and are down 70% since end-February, widening the premium of SHFE June copper contracts over the October ones.

On the LME, the spread between the cash LME and the three-month copper contract was last at a premium of $49 a ton, the highest since November 2022. It swung from a discount of $63 in early April as stocks in the LME-registered warehouses continue to see outflows. Indicating robust import demand in top metals consumer China, the Yangshan copper premium is at $102 per ton, the highest since December 2023 versus $35 at end-February. China’s copper concentrate imports reached a record high in April, spurred by an expansion of domestic copper smelting capacity, while unwrought copper imports were steady amid high shipments to US from Asia.

LME aluminium was flat at $2,412 a ton, zinc rose 1% to $2,645, lead added 1.7% to $1,978, and nickel was up 0.5% to $15,615, while tin fell 0.7% to $31,650.