Metals prices tumble as arrest of Huawei executive revives trade fears

December 6, 2018

London (Dec 6) Industrial metals prices fell on Thursday and copper hit a three-week low after the arrest of a top Chinese executive in Canada dampened hopes for an easing of U.S.-China trade tensions.

The arrest of the chief financial officer of tech giant Huawei for extradition to the United States cast doubt on a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday. It sent global stock markets sharply lower, and hit metals because investors fear tariffs will curtail China's demand for commodities. Benchmark copper on the London Metal Exchange (LME) was down 1.5 percent at $6,083 a tonne at 1210 GMT after touching $6,070.50, the lowest since Nov. 14.

The Huawei arrest had combined with a near 5 percent plunge in oil prices to turn investors negative on metals, said Capital Economics analyst Ross Strachan.

"The optimism there was in the markets at the beginning of the week evaporated extremely quickly," he said.

Healthy supply-demand fundamentals, however, meant copper was unlikely to fall much further, he added, predicting prices at $6,250 a tonne at the end of 2019.

CHINA EXPORTS: China's economy is showing signs of cooling, with export growth expected to have slowed in November. TRADE DISPUTE: Despite the Huawei arrest, China expressed confidence in striking a trade deal with the United States within their 90-day ceasefire period. OIL: Oil lost nearly 5 percent after OPEC signalled it may agree to a smaller output cut than expected.

GERMAN EXPORTS: Strong foreign demand drove an unexpected rise in German industrial orders in October.

COPPER TECHNICALS: Copper has fallen beneath its 50- and 100-day moving averages, worsening its technical picture.

COPPER STOCKS: In a sign of tight supplies that should support prices, headline stocks of copper in LME-registered warehouses fell to 124,950 tonnes, down from almost 400,000 tonnes in March and the lowest since 2008. SPREAD: The premium of cash copper over the three-month contract fell to $2,75 from $44 in late November, suggesting that availability of nearby metal has increased. RUSAL: The top Democrat on the Senate Foreign Relations Committee urged the Trump administration not to waive or remove sanctions on Russian billionaire Oleg Deripaska or companies, including aluminium producer Rusal, that he controls.

OTHER METALS: LME aluminium was down 1.4 percent at $1,941.50 a tonne, zinc was down 1.3 percent at $2,584, nickel was 2.4 percent lower at $10,965, lead had lost 1.2 percent to $1,961 and tin was down 1 percent at $19,000.


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