Copper hit a one-week low at $7,118 while the dollar retained its strength, leaving the market set for its biggest weekly drop since April on concerns about slowing growth in top metals buyer China and the impact of the US trade tariffs last Friday, a report monitored by business a.m. has said.
President Donald Trump on Friday announced that the United States will implement a 25 percent tariff on $50 billion of goods from China related to intellectual property and technology, and pledged to impose further levies if the Asian nation takes retaliatory measures.
Rising China-US trade tensions will put additional pressure on China’s economy, which is starting to show signs of cooling under the weight of a multi-year crackdown on riskier lending.
“Now is not the time for the copper market to rally,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“The growth story is running into problems with recent weak data from the US, Europe and China,” he said, adding that a strengthening dollar and weakening emerging market currencies were “raising concerns about growth going forward.”
The dollar index hit a seven-month high earlier, getting a boost as the Euro sagged after a cautious European Central Bank signalled it will keep interest rates at record lows well into next year.
Three-month copper on the London Metal Exchange was last bid down 0.5 percent in official midday rings at $7,141 a tonne, having hit a one-week low of $7,118. The industrial metal has slipped from a 4-1/2 year high hit last week on supply concerns at the world’s biggest copper mine.
China reported weaker-than-expected industrial output, investment and retail sales for May, suggesting further weakness ahead if Beijing sustains its crackdown on factory pollution and local government spending.
China’s output of 10 non-ferrous metals, including copper, aluminium, lead, zinc and nickel rose 4.3 percent in May from a year earlier to 4.55 million tonnes. Aluminium production was up 1.5 percent at 2.79 million tonnes.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 1.2 percent from last Friday.
Zinc inventories in warehouses monitored by the Shanghai Futures Exchange rose 7.6 percent from last Friday and lead gained six percent.
Aluminium was last bid down 1.1 percent in rings at $2,231, zinc traded down 1.2 percent at $3,150, lead was last bid down 0.5 percent at $2,442, tin traded down 0.6 percent at $20,760 while nickel was last bid up 0.3 percent at $15,330.