Copper eases as US-China trade row escalates
LONDON: Copper snapped a four-session winning streak on Wednesday after China slapped tariffs on U.S. goods, amid an escalating trade dispute between the world's two largest economies.
Benchmark copper on the London Metal Exchange ended down 1.1 percent at $6,724 per tonne. The metal used in power and construction recorded its worst one-day performance in over two weeks.
The United States on Tuesday imposed 25 percent tariffs on about $50 billion worth of goods, including some metals products. The tariffs are aimed at frustrating China's efforts to upgrade its manufacturing base and to try to force changes in Beijing's intellectual property practices.
"The escalation of trade war between China and the U.S is weighing on investor sentiment and this is hurting everything that is risk-sensitive," said FOREX.com analyst Fawad Razaqzada.
TRADE: Less than 11 hours after the U.S. tariffs were announced China hit back on Wednesday, retaliating with a list of similar duties on U.S. imports including soybeans, planes, cars, whiskey and chemicals.
WTO: China also initiated a World Trade Organization dispute procedure against the U.S. 301 tariffs investigation.
U.S. ECONOMY: St. Louis Fed President James Bullard said the possibility of an escalating trade war between the United States and China will result in a bigger negative impact on the U.S. economy.
DOLLAR: The greenback eased against a basket of major currencies on Wednesday, helping to cap losses in the downbeat metals market.
COPPER INVENTORIES: Total stocks of copper in LME-approved warehouses eased to 378,075 tonnes but remained near five-year highs touched last week. Over 80 percent of this total stock was available to the market.
MARKETS: The speed with which the trade struggle between Washington and Beijing is ratcheting up led to a sharp selloff in global stock markets and commodities.
COPPER OUTLOOK: "We expect demand drivers in China to continue to moderate, as we expect the focus on corporate deleveraging to increase, and real estate completions to slow," Canaccord Genuity said in a note.
ALUMINIUM: LME aluminium was the only gainer among the metals, ending 0.7 percent higher at $1,991 per tonne, after touching its lowest since August in the previous session.
SFHE INVENTORIES: Shanghai Futures Exchange (ShFE) aluminium stocks have fallen for the first time in more than nine months, giving the market faint hopes of a drawdown on record inventories of the metal in China, the world's biggest aluminium producer and consumer.
OTHER METALS: Zinc, used to galvanise steel, shed 0.7 percent to $3,258 per tonne, lead fell 0.8 percent to $2,372, tin slipped 1.2 percent to $20,900 and nickel slid 2.4 percent to $13,150.