LONDON: Copper prices fell on Tuesday as factory activity in top metals consumer China missed expectations, indicating that US tariffs were affecting the manufacturing superpower while trade tensions between Washington and Beijing drag on.
Benchmark three-month copper on the London Metal Exchange lost 0.3% to $9,588 per metric ton in official open-outcry trading. The most active US Comex copper futures fell 1.5% to $4.786 a pound, reducing the premium against the LME benchmark to $940 a ton from Monday’s $1,074.
The Comex futures hit $4.9495, the highest since April 3, on Monday on concerns that US President Donald Trump’s plan to double tariffs on steel and aluminium imports to 50% from Wednesday would mean that new US copper tariffs, subject to an ongoing investigation in Washington, were more likely.
“We are seeing a general decline following yesterday’s run-up, with traders questioning the sustainability of these levels after another dose of weak China data overnight,” said Ole Hansen, head of commodity strategy at Saxo Bank.
China’s factory activity shrank for the first time in eight months - the Caixin/S&P Global manufacturing PMI fell to 48.3 in May, the lowest reading in 32 months, a private-sector survey showed. On Saturday, China’s official PMI showed May factory activity fell for a second month. With the US manufacturing also contracting in May, for a third straight month, traders were waiting for a possible call between Trump and Chinese leader Xi Jinping. According to the White House, they were likely to speak this week.
Providing support to the LME copper were the 21-day moving average, currently at $9,527, and continuing outflows from the stocks in the LME-registered warehouses. LME’s daily data showed the inventory fell to 143,850 tons, the lowest in almost a year, after 4,600 were delivered out.
The spread between the cash and the three-month copper contract was last at a premium of $49 a ton, indicating concerns about nearby supply in the LME system, partly related to Ivanhoe Mines’ Kakula mine in the Democratic Republic of Congo.
Among other LME metals, aluminium fell 0.8% to $2,447 a ton in official activity, zinc slipped 0.5% to $2,684, lead dipped 0.4% to $1,973, nickel shed 1.0% to $15,375, while tin rose 1.8% to $31,250.
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