Copper touches multi-month peaks on China, U.S. tariffs

Copper prices hit multi-month highs on Wednesday as traders prepared for potential U.S. tariffs, while investor sentiment got a boost from signs of improving demand in China and a possible ceasefire in Ukraine.

Three-month copper on the London Metal Exchange (LME) HG1! gained 1.1% to $9,769 a ton by 1100 GMT, its strongest since November 5.

U.S. Comex copper futures (HGc3) advanced 1.9% to $4.86 a lb., its highest since May 29 last year.

U.S. tariffs of 25% on steel and aluminum products took effect on Wednesday while U.S. Donald Trump has also ordered a probe into possible new tariffs on copper, which has spurred U.S. players to stock up.

“There’s a lot of copper being shipped to the U.S., depleting the inventory levels elsewhere and underpinning prices outside of the U.S.,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“Underlying sentiment has most certainly improved in the last 48 hours, not only because of the possible ceasefire, but also what happened yesterday with U.S.-Canada relations.”

European stock markets jumped on Wednesday after Ukraine agreed to accept a U.S. ceasefire proposal while Trump on Tuesday backed off from doubling metals tariffs after Canada’s Ontario province suspended a move to impose surcharges on electricity exports to the U.S.

In top metals consumer China, copper on the Shanghai Futures Exchange HG1! closed daytime trade 2.08% higher on prospects of improving demand, having earlier hit its highest since September 30.

Underlying fundamentals are showing improvement, with the ANZ Downstream Copper Demand Indicator showing positive growth, especially in grid infrastructure and electric vehicles, ANZ analysts said in a note.

“Manufacturers, supported by recent stimulus measures, are ramping up production… copper cathode inventories in Shanghai and Guangdong extended declines from a peak due to fewer imports in recent months.”

Zinc ZNC1! was the best LME performer, reversing losses to gain 1.5% to $2,956 a ton after Nyrstar said it will cut production by 25% at its Hobart zinc operations in Australia from April.

Among other metals, LME aluminium ALI1! rose 0.6% to $2,719.50 a ton, nickel NICKEL1! advanced 1.4% to $16,720, lead LEAD1! climbed 1% to $2,071.50 and tin FTIN1! added 0.9% to $33,450.
Source: Reuters