By Melanie Burton
MELBOURNE – London metal prices slipped on Monday as the U.S. dollar strengthened and on concerns that escalating global trade tensions could hurt demand.
Concerns remain that trade tensions between China and the U.S. may dampen demand for metals even as China’s September trade data proved more resilient than expected last week.
The United States sought to make currency a central part of any solution to the bruising trade fight, keeping the pressure on Beijing to speed up economic reforms at a gathering of world policymakers at the weekend who pledged to do more to safeguard global growth.
“Markets have been worried that they (China) would be badly hit. The September data shows that they have been navigating through the tough water well so far,” broker Argonaut said in a report.
“While we are confident in copper prices in the mid- to long-term, short-term copper prices may continue to be plagued by risk-off sentiment, a rising dollar and escalating U.S.-China trade wars.”
FUNDAMENTALS
* COPPER: London Metal Exchange copper had edged down 0.5 percent to $6,271 a tonne by 0716 GMT, erasing a 1 percent gain in the previous session. Prices have traded in the $6,090-6,400 range for the past three weeks. Copper prices hit a 13-month trough below $5,800 a tonne in mid-August.
* SHFE: Shanghai Futures Exchange copper climbed 0.2 percent to 50,570 yuan ($7,299) a tonne.
* STOCKS: LME copper stocks have dropped since August as ShFE stocks have climbed, reflecting higher imports to the world’s top metals consumer after a crackdown on waste imports that cut the availability of scrap metal. CU-STX-SGH * “China’s restriction of copper scrap imports (is) boosting demand for use of cathode or other copper products in smelting/refining,” Argonaut added.
* DOLLAR: The U.S. dollar firmed against the pound and euro on Monday as British efforts to secure a Brexit deal ahead of a key European Union summit fanned demand for safe-haven currencies.
* SPREADS: Illustrating a significant shortfall in near-term supply, nearby prices to obtain lead and zinc over the next few months have surged over those further out.
* SHFE STOCKS: Tightening zinc spreads are encouraging more deliveries into warehouses. ShFE warehouse inventories showed that zinc arrivals jumped by 14,169 tonnes, or 48.5 percent, over the past two weeks to 43,373 tonnes. ZN-STX-SGH
Copper arrivals jumped by 12 percent, or 13,703 tonnes, to 125,700 tonnes. CU-STX-SGH
MARKETS NEWS
* Asian shares slipped on Monday as worries over Sino-U.S. trade disputes, a possible slowdown in the Chinese economy and higher U.S. borrowing costs tempered optimism despite a rebound in global equities late last week.
PRICES
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
ARBS ($1 = 6.9286 Chinese yuan renminbi)(Reuters)
