Base metals firm on easing US-China trade tensions and weaker dollar
Copper prices rose on Wednesday as a 90-day pause on most of the tit-for-tat tariffs agreed by Beijing and Washington raised investors' confidence a global recession can be averted and demand will continue for growth-dependent metals.
Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $9,618 a metric ton by 0955 GMT after hitting $9,642, for its highest since April 3.
'Investors have rotated away from safe-havens like gold back into the industrial space,' Panmure Liberum analyst Tom Price said.
'However, they are not re-engaging the market in a vigorous way at this early stage but stay very cautious at the moment. They are wondering what (U.S. President Donald) Trump is going to do next,' he added.
Providing further support, the U.S. dollar extended losses following its biggest decline in more than three weeks overnight after weaker-than-expected U.S. consumer inflation data bolstered the case for Federal Reserve easing.
The weaker U.S. currency makes dollar-priced metals more affordable for other currency holders, while prospects of lower interest rates support the demand outlook for industrial metals.
Copper steady ahead of US-China trade talks, focus on tighter nearby supply
The market focus remains on a probe into potential new tariffs on copper imports that the U.S. has been conducting since February. As a result, the premium of COMEX copper futures over the LME benchmark is elevated and deliveries have been made to the COMEX copper stocks.
The premium reached a peak of 18% in late March, and has fallen to about 10% with copper inventories at the COMEX-owned warehouses rising 77% since end-February to 165,112 tons.
'This reflects front-loading as well as tariff timing uncertainty,' Morgan Stanley said in a note.
It estimates the U.S. has imported an extra 180,000 tons of copper over the last seven weeks, of which only 65,000 haveshown up in the COMEX inventory so far, 'with more to come, leaving a tariff-free buffer of metal'.
Among other metals, aluminium rose 1.3% to $2,521.5 a ton, zinc added 1.9% to $2,754, lead gained 0.2% to $1,992.5, tin climbed 0.4% to $32,805 and nickel was up 0.9% to $15,860.
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