LONDON: Copper prices made modest gains on Wednesday as some funds dipped into the market, but uncertainty about potential tariffs on the world’s biggest metals consumer China kept the rise in check.
Three-month copper on the London Metal Exchange (LME) was up 0.2% at $9,019 per metric ton by 1100 GMT, holding above the $8,757 five-month low touched last week.
“The market is really trying to understand how aggressive these potential tariffs could be and I think the problem is no one really knows the answer,” said Nitesh Shah, commodity strategist at WisdomTree.
Many investors were on the sidelines after conflicting reports about plans by U.S. President-elect Donald Trump regarding tariffs.
During the campaign Trump vowed to impose tariffs of 60% on Chinese imports, but Trump on Monday denied a Washington Post report that said his aides were exploring plans that would only cover critical imports.
Alastair Munro, senior base metals analyst at Marex, said copper found some support from contrarian buying from some Commodity Trade Advisor (CTA) investment funds, which are largely driven by computer programs.
Copper edges up with support from tariff bets, weaker dollar
Also helping copper was a firm Yangshan copper premium, which reflects demand for copper imported into China. It was last at $70 per ton, up from $43 two months ago.
A firmer dollar index, however, weighed on metals markets, making commodities priced in the U.S. currency more expensive for buyers using other currencies.
LME zinc was the worst performer, easing 0.9% to $2,850 a ton.
Munro said the weakness was largely due to selling linked to index rebalancing flows, a five-day monthly process that kicked off on Wednesday.
Among other metals, LME aluminium slipped 0.2% to $2,513 a ton, nickel gained 0.3% to $15,450, lead was up 0.4% at $1,963 and tin added 0.6% to $30,110.
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