Copper buoyed by US-China trade truce extension

LONDON: Copper prices firmed on Tuesday as relief dominated the mood after the United States and China extended their tariff truce, ahead of U.S. inflation data that could determine the direction of U.S. interest rates, traders said.

Benchmark copper on the London Metal Exchange traded 0.2% higher at $9,751 a metric ton in official rings. Traders said volumes were low due to the summer lull.

The 90-day extension of the tariff truce between two of the world’s largest economies has eased concerns about trade friction and is expected to support demand ahead of the seasonal autumn import surge for goods such as electronics.

Signs of easing price pressures in the United States will reinforce expectations the Federal Reserve will cut interest rates next month, which could weaken the U.S. currency and potentially boost demand for dollar-priced metals.

“Focus will remain on U.S. macroeconomic releases, with particular attention to any indications of weakness followingthe recent sharp downward revision to employment figures,” Benchmark Mineral Intelligence said in a note.

Also weighing on copper prices are rising stocks in LME approved warehouses, which at 155,000 metric tons are up more than 70% since late June.

Copper prices steady as supply concerns ease

Higher inventories have also eased worries about copper availability on the LME market and widened the discount between the LME cash copper contract and the three-month forward to $84 a ton, its highest since February.

Also signalling softer demand in top consumer China is the Yangshan copper premium, a gauge of the country’s appetite for importing the metal, at $45 a ton compared with levels above $100 a ton in May.

Clues to demand prospects for industrial metals in China are expected to come from a spate of data due this week on loans, house prices, investment and industrial production.

Aluminium was up 0.8% at $2,610, zinc rose 0.4% to $2,834.5, lead climbed 0.5% to $2,008.5, tin firmed 0.1% to $33,825 and nickel retreated 1.1% to $15,180 a ton.