Copper prices reached a one-month high on Tuesday as a strike at a major mine in Chile underlined a supply shortfall, although investors were on edge ahead of US-China trade talks later this week. Benchmark copper on the London Metal Exchange (LME) ended up 1.4% at $6,042 a tonne after touching $6,051.50, the highest since May 21. But prices remain far from April's peak of $6,608.50, having been pushed lower by a deepening rift between Washington and Beijing that investors fear will weaken economic growth and demand for metals.
"Fundamentally for copper things are starting to look more constructive," ING analyst Warren Patterson said. "We have this strike in Chile. There are growing concerns that the copper concentrate balance is tightening. Refining charges in China have fallen, signalling a tightening in the market, and Chinese copper premiums have started to make a comeback."
US President Donald Trump views this week's meeting with China's Xi Jinping as a chance to see where Beijing stands on the two countries' trade war, and is "comfortable with any outcome" from the talks, a senior US official said. The dollar touched its weakest since March, helping dollar-priced metals by making them cheaper for buyers with other currencies.
US consumer confidence fell to a 21-month low in June. Workers at Codelco's Chuquicamata copper mine in Chile rejected the company's latest offer over the weekend, having been on strike since mid-June. The global world refined copper market showed a 51,000 tonnes deficit in March after a 72,000 tonnes surplus in February, the International Copper Study Group (ICSG) said.
For January-March, the market was in a 32,000 tonnes deficit, the ICSG said. Chinese Yangshan import premiums have risen to $59.50 from a two-year low of $47 last month. China's refined copper cathode imports fell 29% year-on-year in May to 243,056 tonnes and were also down 15% from the previous month. Copper stockpiles in Shanghai Futures Exchange (ShFE) warehouses have fallen to 134,747 tonnes from more than 260,000 tonnes at the end of March.
Stocks in LME-registered warehouses, however, have climbed to 242,875 tonnes from a low of 111,125 tonnes in March. LME lead finished up 1.4% at $1,939.50 a tonne as China's top producer Henan Yuguang Gold and Lead Co shut down one production line at a lead smelter in Jiyuan for a 30-day maintenance that will affect some 10,000 tonnes in output. LME tin ended 0.1% lower at $19,050, with the premium for cash metal over the three-month contract diving to $15 from more than $200 earlier this month, pointing to more plentiful nearby supply. LME aluminium rose 1.2% to $1,814 a tonne, zinc gained 2.1% to $2,543 and nickel closed up 1.3% at $12,300.
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