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Sunday 16

December, 2018 6:18 AM



Copper hits 2-week low over trade tensions

Copper hits 2-week low over trade tensions

The flare up in trade tensions between the US and China has boosted the US dollar, weighing on prices of copper and other base metals.

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By AAP 03.08.2018 08:45 AM

Copper has hit a two-week low as a flare-up in trade tensions between the United States and top metals consumer China boosted the US dollar and overshadowed news of a strike at BHP's Escondida mine in Chile.

The US administration raised pressure on China for trade concessions on Wednesday by proposing a 25 per cent tariff on $US200 billion of Chinese imports instead of the 10 per cent previously proposed.

The US dollar rallied sharply on the news, making dollar-priced metals costlier for non-US investors, while global equities and bond yields fell as risk aversion outweighed strong corporate earnings reports.

Metals investors fear mounting trade friction between the world's two largest economies will crimp growth and hit industrial demand, making the strike at Escondida, the world's biggest copper mine, less of a concern for now.

Workers at the BHP mine voted to reject a company wage offer and go on strike, according to a statement on Thursday.

"The market was expecting some sort of disruption at Escondida but it would need to be a long strike to change our expectations of a balanced refined (cathode) market," said Oliver Nugent, commodities strategist at ING.

"The more dominant theme is trade war tensions. Chinese indicators have been hit pretty hard. The direct impact on GDP of trade tariffs is pretty low, but the sentiment knock if confidence collapses, that's more serious."

* COPPER: Three-month copper on the London Metal Exchange closed down 0.5 per cent at $US6,139.50 a tonne, having earlier hit a two-week low of $US6,066. Copper posted its biggest monthly fall last month since December 2016.

* FED: The US Federal Reserve kept interest rates unchanged on Wednesday but described the economy as strong, keeping the central bank on track to increase borrowing costs in September and boosting the dollar.

* ALUMINA: The city of Chaoyang in China has cancelled a planned $US3.4 billion alumina project after a public consultation. The plant would have supplanted Norsk Hydro's Alunorte project in Brazil as the world's biggest alumina refinery.

* PHILIPPINES: The Philippines confirmed on Thursday that 23 of 27 mines reviewed for compliance with state regulations will continue to operate, while the remaining four in the world's No. 2 nickel supplier that failed the audit could face closure.

* OTHER METALS: Aluminium ended down 0.8 per cent at $US2,036 a tonne, zinc closed up 0.3 per cent at $US2,563, lead closed down 0.5 per cent at $US2,115, tin ended down 1.1 per cent at $US19,605 while nickel closed down 2 per cent at $US13,320.

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