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Sunday 22

July, 201810:37 AM



Copper hits 7-month low as tensions rumble

Copper hits 7-month low as tensions rumble

Benchmark copper ended down 1.6 per cent at $US6,523 a tonne from an earlier $US6,519, its lowest since December 5

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By AAP 03.07.2018 08:36 AM

Copper prices have hit seven-month lows as the market prices in weaker demand in top consumer China, which is embroiled in the trade spat with the United States even as its manufacturing sector slows.

Benchmark copper ended Monday down 1.6 per cent at $US6,523 a tonne from an earlier $US6,519, its lowest since December 5.

Prices of the metal used widely in power and construction have tumbled more than 10 per cent since June 7.

"Investors are taking risk off the table because of trade tensions, which threaten Chinese exports to the United States and also their profit margins," said SP Angel analyst John Meyer.

"Industrial metals rely on China."

US President Donald Trump has this year sought to renegotiate some of the United States' trading relationships, in particular with China. He has imposed tariffs on some imports, in turn sparking retaliatory action by other countries, raising fears of a global trade war.

"For now, we remain of the view that a large scale "trade war" remains a low probability, though the odds of it happening have clearly increased," JPMorgan analysts said in a note.

"Acknowledging the rising trade risks, we have no exposure to the base metals complex."

China accounts for nearly half of global copper consumption estimated this year at around 24 million tonnes.

Growth in China's manufacturing sector cooled slightly in June as firms faced rising input costs and a decline in export orders amid an escalating trade dispute with the United States, a private survey showed.

A stronger US currency also weighed on industrial metals as it makes dollar-denominated commodities more expensive for non-US firms.

Aluminium fell 1.6 per cent to $US2,098 a tonne, zinc was down 1.1 per cent to $US2,822 a tonne, lead slid one per cent to $US2,386 a tonne, tin was unchanged at $US19,750 a tonne and nickel lost 2.3 per cent to $US14,550 a tonne.

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