LONDON: Copper prices extended losses on Wednesday as the escalating US-China trade war fuelled fears of a demand downturn, though stronger Chinese economic growth limited the price drop.
Benchmark three-month copper on the London Metal Exchange (LME) gave up 0.5% to $9,118 a metric ton in official open-outcry trading, having finished in negative territory in the previous session. Copper has shed 10% since a peak of $10,164.50 on March 26, but it has recovered somewhat since hitting a 16-month low of $8,105 on April 7.
“The demand side of the equation looks much softer because of the uncertainties. We don’t have full clarity on how far this trade war can really go,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
Base metals joined shares and other risky assets in sliding after Nvidia took a hit from US restrictions on chip sales to China as trade conflict intensified.
Eventually, though, China and the US will have to come to a deal, which would be positive for metals, Aslam added. “Both countries will come to the table because the Trump administration knows very well that they cannot work alone in this world,” he said.
Upbeat data from China limited losses after China’s first-quarter economic growth outstripped expectations, underpinned by solid consumption and industrial output. The most traded copper contract on the Shanghai Futures Exchange (SHFE) fell 1.1% to 75,210 yuan ($10,268.98) a ton.
“There are ongoing fears about how tariffs will impact China’s economy,” said Kyle Rodda, senior financial markets analyst at Capital.com.
LME zinc was the worst performer on Wednesday, falling 1.6% in official activity to $2,574.50 a ton after LME inventories surged by 70% to 190,550 tons.
LME aluminium lost 0.2% to $2,369.50 a ton, lead fell 0.8% to $1,900, tin was down 0.3% at $30,950 and nickel added 0.3% to $15,600.
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