Copper steadies as China points to further stimulus measures

LONDON: Copper prices steadied on Tuesday as top consumer China signalled further stimulus measures to help boost economic growth and demand, and President Donald Trump raised hopes of reaching a trade deal with Beijing.

Benchmark copper on the London Metal Exchange was up 0.5 percent at $5,929 a tonne at 1059 GMT. Prices of the metal used in power and construction have tumbled nearly 20 percent since June and are holding near 18-month lows.

"Chinese trade data and industrial production numbers from Europe suggest the global manufacturing cycle is turning down, which is negative for base metals," said Danske Bank analyst Jens Pederson.

"Chinese stimulus will take time, the impact will be seen in the second half, it is not a second-quarter story."

STIMULUS: China will aim to achieve "a good start" in the first quarter, the National Development and Reform Commission (NDRC) said, indicating the government is ready to provide further economic stimulus.

TRADE: Trump predicted Washington would reach a deal with China to end a tit-for-tat trade war, saying Beijing wants to negotiate and that talks are going well.

TRADE: China's exports fell by the most in two years in December, while its imports also contracted, pointing to further weakness in the world's second-largest economy in 2019 and deteriorating global demand.

INDUSTRY: Euro zone industrial output tumbled 1.7 percent in November from October, its biggest fall in nearly three years, stoking concerns about the bloc's growth in the final quarter of 2018.

SPREADS: Expectations for an oversupplied copper market saw the discount for the cash over the three-month contract close at a 5-month high of $31,50 a tonne on Monday.

"Copper has difficult dynamics for the next six months. Demand is likely to be lacklustre, particularly out of China as the economy slows and credit growth remains weak." Liberum analysts said in a note.

RUSAL: The U.S. Senate will begin voting on Tuesday on a resolution criticising the Trump administration's decision to ease sanctions on companies linked to Russian oligarch Oleg Deripaska, including aluminium giant Rusal.

ALUMINIUM: Concern about oversupply, partly due to expectations of Rusal's aluminium coming to market, also pushed the discount for the cash over the three-month contract to $29 a tonne, the highest since September last year.

PRICES: Aluminium rose 0.7 percent to $1,840, zinc  was down 0.2 percent at $2,480, lead was up 0.3 percent at $1,989, tin gained 0.6 percent to $20,600 and nickel climbed 1.0 percent to $11,500 a tonne.