Copper under pressure from tariffs and growth angst

LONDON: Copper prices slipped on Monday as the market focused on the negative consequences for global economic growth and industrial metals demand from U.S. import tariffs.

Benchmark copper on the London Metal Exchange (LME) was down 0.8% at $9,533 a metric ton by 1033 GMT.

It hit a four-month high of $9,739 last week after U.S. President Donald Trump granted exemptions for automakers from 25% tariffs on Canada and Mexico for one month.

However, the relief was short-lived and copper is again being pressured by tariffs and a trade war.

“We would be cautious going into March as we think the markets are not paying sufficient attention to a slowing U.S. growth picture, which could more than offset concerns about tight supplies,” said Marex consultant Edward Meir.

Copper eases on weak China data

“This is one of the consequences of tariffs; it in effect freezes business activity.”

China consumes about half of global copper supplies annually.

Weaker demand for copper, used widely in the power and construction industries, can be seen in stocks in warehouses monitored by the Shanghai Futures Exchange. At nearly 270,000 tons, stocks are up more than 220% since the start of the year.

In Shanghai’s bonded warehouses, copper stocks have risen nearly 200% to 45,000 tons since the start of January.

However, traders say the Yangshan premium, suggests stronger Chinese demand. At $50 a ton, this gauge of China’s appetite for importing copper has gained more than 40% since early March.

Meanwhile, stocks in LME-registered warehouses have been declining as metal is shifted to COMEX in anticipation of U.S. tariffs on copper imports.

Cancelled warrants - metal earmarked for delivery - at more than 40% of total stocks suggests that more copper is due to leave LME warehouses over the coming days.

Industrial metals also gained some support from a weaker U.S. currency.

Aluminium was down 0.2% at $2,699 a ton, zinc lost 1% to $2,858, lead rose 1.1% to $2,041 and tin gained 0.2% to $32,595 while nickel advanced 0.3% to $16,560.