Copper rises as US-China trade talks set to resume

LONDON: Copper jumped to a three-week high on Tuesday after U.S. President Donald Trump said trade talks with China would resume ahead of a meeting at the G20 summit, raising hopes for a resolution to the damaging conflict.

The tit-for-tat trade war between the world's top two economies has sapped demand for metals and overshadowed strong fundamentals in markets such as copper, analysts say.

"The metals group had been oversold over the last few days and the trade war news may have prompted some short covering after the two presidents agreed to meet at the G20 Summit," said INTL FCStone analyst Edward Meir.

"Fundamentals of the metals are constructive but people are concerned about the demand side."

Benchmark copper on the London Metal Exchange (LME) ended 1.7% higher at $5,945 per tonne, after touching its highest since in May 28 at $5,974.

Prices were also supported by supply disruptions at one of the world's largest mines in Chile and Glencore's Zambian smelter.

"I would say copper disruptions are running slightly ahead of expectation this year," said Colin Hamilton, head of commodities research at BMO Capital Markets, adding that this boosted copper fundamentals.

BMO has forecast a deficit of 260,000 tonnes this year in the 24-million tonne market, Hamilton said.

CODELCO: Workers at Codelco-owned Chuquicamata mine, which produced 320,744 tonnes of copper in 2018, downed tools on Friday after a failed labour deal.

Tensions flared on Tuesday when Chilean police fired rubber bullets and tear gas in clashes with miners striking at the mine as the workers tried to block access to a site.

COPPER STOCKS: Supporting prices was a slight decline in headline copper inventories in warehouses monitored by the LME.  They fell 600 tonnes to 250,750 tonnes.

Inventories of copper in warehouses registered with the Shanghai Futures Exchange have nearly halved since mid-March to 139,556 tonnes.

INDONESIA COPPER: Indonesian copper miner Amman Mineral Nusa Tenggara said it expected to export about 236,000 tonnes of copper concentrate in 2019, below its export quota, as it increases supplies to a local smelter.

COPPER LONG-TERM: Analysts at BofA Merrill Lynch said the U.S-China trade dispute overshadowed strong copper fundamentals, with steady Chinese demand and falling treatment and refining charges.

INTEREST RATES: U.S. Federal Reserve is expected to lay the groundwork for a rate cut later this year at a meeting on Wednesday, a day after the European Central Bank indicated a possibility of new rate cuts or asset purchases.

PRICES: Aluminium ended 1.3% higher at $1,781 per tonne, zinc finished up 1.7% at $2,512, lead was up 1.8% at $1,919.50, tin added 1.2% to $19,170, while nickel was bid about 1.6% higher at $11,775.