Copper and zinc jump as US-China trade tariffs undershoot expectations

LONDON: Copper jumped to its highest in three weeks on Wednesday, boosted by a weaker dollar after a new round of U.S.-China trade tariffs were not as high as previously expected.

China will levy tariffs on about $60 billion worth of U.S. goods in retaliation for U.S. tariffs on $200 billion worth of Chinese goods. Washington's new duties, however, were set at 10 percent for now, rising to 25 percent by the end of the year, rather than starting immediately at 25 percent.

Benchmark copper on the London Metal Exchange (LME) jumped to its highest since Sept. 29 at $6,145 a tonne, though it was later bid at a steady $6,083 after failing to trade in official rings.

Zinc, meanwhile, rose 3 percent to $2,420 in official rings for its biggest jump in a month.

"In some ways the bad news had been priced into the markets and, if anything, the news on trade had been slightly less severe than we had thought it would be," said Capital Economic analyst Caroline Bain.

"It's still too early to talk about this as sustainable ... it just seems to be a bit of a relief rally after all of the bad news."

Base metals prices have slid this year, largely because of fears the U.S.-China trade dispute could choke global economic growth and sap demand.

TRADE TENSIONS: China is not afraid of "extreme measures" the United States is taking in their trade war and will use the dispute as an opportunity to replace imports, promote localisation and accelerate development of high-tech products, state media said.

OTHER ASSETS: The dollar index eased by 0.1 percent while risky assets such as global equities advanced.

COPPER AND ZINC STOCKS: On-warrant stocks of copper rose to 152,750 tonnes but are still down 55 percent from the 2018 peak hit in March. Zinc stocks on the LME are near their lowest since April, whereas ShFE zinc inventories remain barely above a decade low.

DEFICIT: The global zinc market deficit deepened to 32,500 tonnes in July, from 14,200 tonnes in June, data from the International Lead and Zinc Study Group (ILZSG) showed.

LEAD STOCKS: On-warrant stocks of lead available to the market in LME-registered warehouses jumped 18,850 tonnes, or 39 percent, to 67,125 tonnes. This lifted on-warrant stocks from their lowest levels since January 2009.

LEAD PRICES: LME lead was traded down 1.6 percent to $2,041 a tonne, heading for its first decline in six sessions.

PRICES: Aluminium was bid down 0.8 percent to $2,018 a  tonne, tin was bid 0.1 percent higher at $19,000 and nickel rose 1.4 percent to $12,570.