LONDON: Copper prices fell to one-month lows on Friday as a higher dollar triggered profit-taking on long positions, but expectations of stronger growth and demand around the world limited losses. Benchmark copper on the London Metal Exchange was down 3.3% at $6,265 a tonne at 1614 GMT. Prices of the metal used in the power and construction industries earlier touched a low at $6,230, the lowest since July 8.
"What has been very much a China led recovery is definitely broadening out. Industrial data from Europe is improving," said BMO analyst Colin Hamilton. A rising US currency makes metals priced in dollars more expensive for holders of other currencies, which subdues demand. This relationship is used by funds to generate short term buy and sell signals from numerical models.
Weighing on sentiment in industrial metals markets was escalating tension between China and the United States after President Donald Trump moved to ban transactions with the Chinese owners of two popular mobile apps. Three-month aluminium was down 0.7% at $1,765 a tonne, zinc fell 0.9% to $2,390, lead slipped 2.7% to $1,913, tin gained 0.7% to $17,720 and nickel ceded 0.8% to $14,360.
Trump also reimposed 10% tariffs on imports of unalloyed aluminium from Canada in an attempt to protect high-cost smelters in the United States, an event the aluminium market had been expecting for some months. This can be seen in the US physical market premium, paid on top of the benchmark LME aluminium price, at $280 a tonnes, up more than 50% since May.
Jorge Vasquez, founder of consultancy Harbor Aluminum, expects the premium to head towards $350 a tonne. "Re-imposition of tariffs on Canada will revive profit margins by at least $150 a tonne for US smelters, mills, extruders and remelters with casthouses," Vasquez said.
Data compiled by Harbor and sourced from the US government shows Canada's primary aluminium exports to the United States in the second quarter surged 139% year on year to 536,000 tonnes, a new record.
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