Copper falls on renewed US-China tensions, stronger dollar

SINGAPORE: Copper fell on Thursday on concerns that rising US-China tensions could further hurt the global economy and demand for metals, while a stronger US dollar also pressured prices.

Washington on Wednesday barred Chinese passenger planes from flying to the United States from June 16, and is expected to designate at least four state-run Chinese media outlets as foreign embassies, increasing restrictions on their operations.

Traders have been worried that deteriorating US-China relations could eventually hurt an existing trade deal between the world's two biggest economies and further dampen the global economy.

Copper is often used as a gauge of global economic health.

The renewed Sino-US tensions also pulled the yuan back against the dollar, indicating risk-off sentiment.

The dollar rebounded from its March low, reducing demand for metals traded in the greenback as they are now more expensive for buyers using other currencies.

"Base metals are no longer following equities. They are just following currencies now," said a metals trader. "The US-China tension will definitely heat up as it's (closer to) election time."

Three-month copper on the London Metal Exchange (LME) fell 0.8pc to $5,479 a tonne by 0703 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange declined 0.4pc to 44,720 yuan ($6,281) a tonne.

FUNDAMENTALS

OTHER PRICES: LME nickel dropped 1.8pc to $12,630 a tonne and aluminium declined 0.5pc to $1,561.50 a tonne. In Shanghai, aluminium rose 0.5pc to 13,165 yuan a tonne and nickel fell 1.6pc to 102,190 yuan a tonne.

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