Metals rise on softer dollar, US-China trade talks

11 Dec, 2018

Three-month benchmark copper on the London Metal Exchange (LME) rose 1.1 percent to $6,155 per tonne in official open outcry activity.

"We are back on risk on trade and we are seeing a small recovery in metals as well but we can't make too much of it," said FOREX.com analyst Fawad Razaqzada, adding that prices for metals would be volatile ahead of next week's US Federal Reserve meeting.

Hurting the dollar and boosting equities and metals were discussions between representatives of China and the United States over the road map for the next stage of their trade talks on Tuesday.

All five key London base metals are on track to post a yearly drop in 2018, with copper and zinc both down more than 20 percent year-to-date on concerns the US-China trade friction will hurt demand.

"Negative market sentiment stemming from the US-China dispute has outweighed tight fundamentals for base metals," Fitch Solutions said in a 2019 commodities outlook, noting that stocks at London Metal Exchange warehouses continued to fall.

COPPER STOCKS: Headline stocks of copper in warehouses monitored by the LME fell 1,200 tonnes to 121,300 tonnes, the lowest since July 2008.

CHINA DEMAND: Concerns remained over lacklustre demand from China after copper imports fell 3 percent in November from a year ago but they were up 8.6 percent from October.

"China's trade data has not provided relief to the slowdown fears, putting pressure on aluminium and copper prices," said Julius Baer Commodities Research Analyst Carsten Menke.

"Against the backdrop of a cooling global economy, we do not project a major pickup in demand."

CHINA LOANS: China's banks extended more new loans than expected in November after a sharp drop the previous month, in a sign that recent government pressure on lenders to help struggling smaller firms may be starting to bear fruit.

ALUMINIUM STOCKS: On-warrant inventories of aluminium in LME-monitored warehouses jumped 4 percent to 829,500 tonnes, and are up 36 percent since the start of October.

DOLLAR: The US currency eased against a basket of major currencies. A weaker greenback makes dollar-denominated commodities cheaper for non-US firms, a relationship used by funds to generate buy and sell signals.  SUPPLY: Mining group Anglo American expects its production to rise more than previously expected in 2018 and 2021 while costs are seen lower for this year, its chief executive officer said on Tuesday.

OTHER METALS: Aluminium added 1.1 percent to $1,957.50 per tonne, zinc rose 1.1 percent to $2,604.50, lead gained 1.6 percent to $1,982, tin gained 0.2 percent to $18,980 while nickel was bid 0.5 percent higher at $10,850.

Copyright Reuters, 2018

Read Comments