LONDON: Copper prices slumped to the lowest in two months on Tuesday on worries about the impact of incoming US President Donald Trump on the economy of top metals consumer China.
Three-month copper on the London Metal Exchange (LME) fell 2.2% to $9,125 per metric ton in official open-outcry trading, the weakest since Sept. 11.
The slide was due to investors selling long or bullish positions, which pushed the market below key technical levels, unleashing further selling, a trader said.
Trump is expected to tap US Senator Marco Rubio to be his secretary of state, sources told Reuters on Monday, arguably the most hawkish option on Trump’s shortlist and someone who has advocated for a muscular China policy.
“Trump hasn’t pulled back on the idea of rolling out tariffs targeting China. That’s really going to hurt that economy because it’s vulnerable right now, it’s not as robust as it was in 2018/19,” said Tom Price, head of commodities strategy at Panmure Liberum. “We’re also now fading into the seasonal low period for Asia and China metals demand.”
The most-traded December copper contract on the Shanghai Futures Exchange (SHFE) fell 1.6% to 75,310 yuan ($10,406.82) a ton. Adding to market gloom is investor disappointment about the scale of China’s stimulus measures. Also weighing on metals was a buoyant US dollar, which touched a four-month peak against a basket of other major currencies as investors continued to pile into trades seen as benefiting from the Trump administration.
A stronger dollar makes greenback-priced metals more costly for buyers using other currencies. LME aluminium fell 0.9% in official activity to $2,564 a ton, nickel dipped 0.2% to $16,070 and zinc dropped 1.5% to a seven-week low of $2,933.
Tin tumbled 3.6% to $30,145, having touched the weakest in over three months at $29,655, while lead was unchanged at $2,022.
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