Copper pressured by US tariff threat, but China data supports

LONDON: Copper prices came under pressure on Monday from the threat of tariffs on U.S. imports, but stronger industrial activity in China raised hopes of stronger demand.

Benchmark copper on the London Metal Exchange (LME) was up 0.1% at $9,368 a metric ton by 1025 GMT.

U.S. President Donald Trump is planning to add another 10% tariff on Chinese goods on Tuesday, effectively doubling duties imposed on February 4.

China’s economic health is crucial for base metals demand because the country is the world’s largest consumer and relies heavily on these metals for its vast manufacturing sector.

“China’s PMIs suggest demand may recover, but the tariff cloud is hanging over everything,” one copper trader said.

China’s official purchasing managers index (PMI) expanded in February after contracting the previous month after a solid rise in production, but the index for new export orders contracted.

“Traders are now looking ahead to China’s National People’s Congress for potential economic support measures, adding further optimism,” Britannia Global Markets said in a note.

Copper slips to lowest in over two weeks on trade war fears

China’s National People’s Congress (NPC), scheduled for March 5, is expected to announce more stimulus, given the looming tariff war and concerns over slow demand.

U.S. manufacturing activity data is also in focus, with expectations of expansion in February, but at a slightly slower pace than in January.

In aluminium, meanwhile, a large holding of warrants and cash contracts have fuelled fears of tight supply on the LME market. It has also created a premium, or backwardation, for near-term contracts against those further along the maturity curve.

Since the start of February, the cash aluminium contract has traded at a premium over the three-month contract, compared with a discount, or contango, since April last year.

Overall, a weaker U.S. currency is supporting dollar-priced industrial metals.

Aluminium was up 0.3% at $2,614 a ton, zinc gained 1.5% to $2,834, lead slipped 0.1% to $1,991, tin was little changed at $31,330 and nickel jumped 1.8% to $15,715.