Copper dips as sizzling rally loses some of its heat

LONDON: Copper fell on Tuesday as US-China tensions rose, stock markets slipped and the dollar strengthened, but prices remained near two-year highs as London Metal Exchange (LME) inventories hit 15-year lows and speculators bet on a further rally.

Benchmark copper on the LME was down 0.8% at $6,736 a tonne in official trading.

The metal reached $6,830 on Sept. 1 -- up than 50% from a low in March -- as demand from top consumer China revived and speculative investors raised their punt on higher prices to the biggest since June 2018.

"The macro picture looks pretty strong," said Robin Bhar, an independent analyst. "Activity in China is more or less back to normal, and the fourth quarter tends to be a good period for metals activity and demand," he said.

"The mantra has to be buy the dips."

US-CHINA: President Donald Trump on Monday again raised the idea of separating the US and Chinese economies. Shares in Chinese chipmaker SMIC plunged after news of potential US sanctions against it.

MARKETS/DOLLAR: European and US share prices fell and the dollar strengthened, making dollar-priced metals more expensive for buyers with other currencies.

STOCKS: Copper inventories in LME-registered warehouses fell 1,000 tonnes to 76,550 tonnes, the lowest since December 2005, and a steep premium for cash copper over three-month metal pointed to a tight market.

Stocks in Comex-registered warehouses in the United States are also declining, but inventories in Shanghai Futures Exchange and Chinese bonded warehouses are up since June.

CHINA: China's new bank loans are expected to have risen in August as the central bank spurred liquidity. Copper's rally has further to run if the link between Chinese demand and credit availability fully reasserts itself, analysts say.

GERMANY: Weak German export data for July pointed to a slow economic recovery.

TIN: Indonesia's refined tin exports in August were 6,158.67 tonnes, up 11.6% year-on-year.

OTHER METALS: LME aluminium was down 0.8% at $1,783 a tonne, zinc fell 2.2% to $2,453.50, nickel slipped 0.4% to $15,132, lead lost 0.9% to $1,952.50, and tin was down 0.6% at $18,230.