Copper Rebounds From Trade-Driven Losses

By David Hodari

LONDON--Copper prices climbed Monday, recouping some of their losses as investors second-guessed some of the industrial metal's heavy geopolitics-driven losses of recent weeks.

The price of copper was up 0.96% at $6,369 a metric ton in midmorning trading.

Gold prices also climbed, rising 0.78% to $1,264.76 a troy ounce, with the U.S. dollar relinquishing some of its recent gains. The haven metal and the greenback tend to move inversely to one another.

The WSJ Dollar Index, which measures the currency against a basket of 16 others, was last down 0.2%, although was still up 4.3% over the past three months. A weaker dollar makes dollar-denominated commodities like metals less expensive for holders of other currencies.

Base metals prices were pummeled over the past month by ongoing investor anxieties over the prospect of a trade war between the U.S. and China. The U.S. imposed a 25% tariff on $34 billion in imports from China, and China retaliating in kind.

Copper prices were last down 12.7% on month, with every industrial metals basket constituent having shed at least 8% in that period. But some think those selloffs have been overdone.

"Direct trade hits to gross domestic product would likely cause limited impacts on copper demand unless the situation escalates to an all-out U.S.-versus-the-world trade war," ING strategists said in a note.

While investors were taking advantage of lower copper prices Monday, "tepid" supply and demand balances in the global market may limit the longevity of the metal's early week recovery.

In a similar vein, while the current discount to copper has seen demand tick up in Shanghai, the Yangshan premium--a barometer of demand in China, the world's largest copper market--was last at a low not seen since October 2017, according to Alastair Munro, a broker at Marex Spectron.

Elsewhere, investors were eager to hear speeches from Federal Reserve board members after U.S. nonfarm jobs data beat market expectations Friday. They were also keeping an eye on Chinese inflation and producer-price index data due out early Tuesday.

Among base metals, zinc was down 2.22% at $2,692 a metric ton, aluminum rose 0.86% to $2,104.50 a metric ton, tin was up 0.31% at $19,445 a metric ton, nickel was up 0.9% to $14,085 a metric ton and lead rose 0.77% to $2,362 a metric ton.

Among precious metals, silver rose 1% to $16.20 a troy ounce, platinum was up 1.5% at $858.30 a troy ounce and palladium was up 1.15% at $966.50 troy ounce.

Write to David Hodari at [email protected]