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Fading Trade War Concerns, Lower Greenback Send Copper Prices Higher

March 27, 2018 at 16:43 by Andrew Moran

Copper futures are trading 1% higher on Tuesday, buoyed by a lower US dollar and fading trade war concerns. The industrial metal’s momentum has stalled in March, dipping below the important $3 threshold. Can copper stabilize well above $3 ahead of the holiday weekend.

May copper futures rose $0.0325, or 1.09%, to $3.0025 per pound at 16:21 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Copper prices have slumped 5% in March and are down nearly 10% year-to-date.

The red metal benefited from reports that Chinese and US officials are holding behind-the-scenes negotiations that could reduce concerns about a global trade war. Both governments have recently announced a series of tariffs on imports, prompting a sell-off in the equities market.

Copper prices were also supported from a weakening US dollar as the greenback tumbled 0.13% to 89.33. A lower buck is good for dollar-denominated commodities like copper because it makes it cheaper for foreign investors to purchase.

Investors are apprehensive about going long for copper because inventories are increasing worldwide. Stockpiles in London Metal Exchange (LME)-registered warehouses have advanced 91% this year at 383,975 tonnes, the highest level since December 2013. Comex copper supplies are up 10%, while Shanghai Futures Exchange (ShFE)-registered warehouse copper stockpiles have surged 90% in 2018.

Earlier this month, industry experts projected that the global copper market could experience a deficit in 2019. Because of a long-term trend of grade decline and a paucity of new investments, supplies are expected to decrease.

The market is unenthusiastic about near-term Chinese demand, despite forecasts that the world’s second-largest economy will likely boost its appetite for the industrial metal. However, should Chinese demand dwindle in the coming years, it could be offset by growing demand in the electric vehicle and renewable energy sectors.

Meanwhile, copper miners in Chile have reached a new labor agreement with workers at Antofagasta’s Los Pelambres mine. Union workers had reportedly urged workers to reject the pay offer and hold strikes.

Other metal commodities are mixed on Tuesday. June gold futures plummeted $11.30, or 0.83%, to $1,343.70 per ounce. May silver futures slid $0.154, or 0.96%, to $16.545 an ounce. April platinum futures shed $5.30, or 0.55%, to $951.10 an ounce. April palladium futures surged $9.40, or 0.97%, to $976.25 an ounce.

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