LONDON: Copper edged higher on Monday bouncing back from its third straight week of losses in a sign that markets are optimistic over planned trade talks between China and the United States and as the recent decline in metals was seen as overdone.
Benchmark copper on the London Metal Exchange (LME) rose 1.6 percent to $6,022 per tonne by 1010 GMT.
Last week, the metal fell to a 15-month low as investors avoided risky assets following a crash in the Turkish lira and fears over the potential impact of a trade war on metal demand.
“The rise today could be investors positioning ahead of the talks between China and the U.S,” said Capital Economics commodities economist, Simona Gambarini.
“They (investors) could be thinking it’s a good sign and the risk of a full-blown trade war will be averted,” she said, adding that the downward price correction in metals last week was overdone.
China and the United States will hold lower-level trade talks this month, the two governments said on Thursday, offering hope that they might resolve an escalating tariff war that threatens to engulf all trade between the world’s two largest economies.
A tit-for-tat trade tariffs war between the United States and its trading partners, including top metals consumer China, sparked fears that these tensions could hurt demand.
SUPPLY: The union representing workers of Chilean copper mine Escondida signed a new collective labour contract on Friday, ending the risk of a strike that could have paralysed the world’s biggest copper mine, easing supply concerns.
COPPER STOCKS: Inventories of copper in China, which at 155,076 tonnes in warehouses monitored by the Shanghai Futures Exchange have halved since a 2018 peak in March.
In LME warehouses, on warrant stocks available to the market inched higher to 223,200 tonnes.
CHINA CREDIT: China’s banking and insurance regulator has asked financial institutions to give more support to infrastructure investment, importers and exporters, and creditworthy companies experiencing temporary problems.
BATTERIES: China’s largest lithium battery maker Contemporary Amperex Technology Ltd plans to begin producing in 2019 next-generation nickel-rich batteries, which are cheaper to make, have longer life spans, and cut the need for cobalt, according to an internal company presentation and a company source.
INVESTORS: Hedge funds and money managers trimmed their net short position in copper futures and options, data from the U.S. commodity regulator showed on Friday.
OTHER METALS: Aluminium rose 1.6 percent to 6,021 per tonne, zinc added 0.3 percent to $2,397, lead was up 1.7 percent at $2,022.50, tin added 0.3 percent to $18,755, while nickel added 1.3 percent to $13,660.