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Copper Slides on Trump’s China Remarks, Capped by Supply Deficit

September 25, 2019 at 14:55 by Andrew Moran

Copper futures are trading lower midweek following President Donald Trump’s strong remarks on China’s practices, as well as congressional Democrats launching an impeachment inquiry. The industrial metal did cap its early losses on the latest data suggesting the global copper deficit is widening.

December copper futures tumbled $0.0125, 0.48%, to $2.595 per pound at 14:12 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. The red metal has had a strong September, advancing 1.4%, prices are still down nearly 2% year-to-date. Over the last 12 months, copper has slumped about 8%.

According to the International Copper Study Group (ICSG), global mined copper output declined in the first half of 2019 by 1.4% to 9.92 million tonnes. In total, the global refined copper market finished the first six months of the year with a supply deficit of approximately 220,000 tonnes.

But industry experts, including Colin Hamilton at BMO Capital Markets, believe that the figure is likely higher:

On our estimates, and balancing for stronger concentrate imports and spot treatment charges, we believe it may well have fallen. We reiterate that, with supply holding up its end of the bargain, the copper market is in deficit this year. However, deficits don’t matter for pricing without improved demand.

Top producers, Chile and Indonesia, led the slide by 2.5% and 55%, respectively. Weather played an important factor for Chile, while the transition to different ore zones contributed to Indonesia’s fall.

Also, in other data, on-warrant London Metal Exchange (LME) copper supplies declined to 183,925 tonnes, a five-month low.

Speaking at the United Nations on Tuesday, President Trump slammed China’s practices over currency manipulation and intellectual property theft, which he said will be discussed at next month’s high-level trade negotiations. The president reiterated that he “will not accept a bad deal.” This had some analysts concerned that it might harm renewed talks between the world’s two largest economies.

Later in the day, news broke that the House Democrats were launching an impeachment inquiry over Trump’s alleged request for the Ukrainian government to investigate former President Joe Biden and his son and their involvement in an energy firm. It is unclear if the Democrats will continue to pursue impeachment after the release of the transcript between Trump and Ukrainian President Volodymyr Zelensky, which does not show the US leader talking about withholding aid in exchange for a probe.

In other metal markets, December gold futures fell $7.00, or 0.45%, to $1,533.20 per ounce. October silver futures slipped $0.10, or 0.55%, to $18.525 an ounce. December palladium futures plunged $33.40, or 2.03%, to $1,613.00 per ounce. December platinum futures shed $18.30, or 1.92%, to $937.10 an ounce.

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