Copper recovers as trade fears recede, aluminium hits near 8-month low

LONDON: Copper rose on Thursday on receding fears about a trade war but ended the quarter down 7 percent, while aluminium hit a near 8 month low on rising stocks and disappointment over China's winter output curbs.

Metals markets were shaken this month when U.S. President Donald Trump moved to impose tariffs on Chinese goods and Beijing threatened retaliation. But fears of a trade war have eased on hopes that negotiations can bring a compromise.

Aluminium remains particularly weak, however, with Shanghai inventories at record levels of nearly 1 million tonnes and London Metal Exchange inventories at 1.29 million tonnes, up nearly 20 percent since early February.

"I think the reaction to Trump's trade barriers is vastly overdone," said John Meyer, partner at broker SP Angel.

"There will be some token retaliation (but) China is going to continue to grow and the world will continue to consume a near similar amount of metal to before the tariffs, the metal will just be sourced from different places."

On aluminium, Meyer said that, while China's cuts often disappoint because it usually increases better quality production at the same time as cutting inefficient output, the latest deliveries onto the LME were the usual post Lunar New Year flows.