Shanghai copper and nickel hit their lowest in more than three months on Monday as an escalation of a trade dispute between the United States and China revived concerns of a demand slowdown in China, the world’s top metals consumer.
President Donald Trump on Sunday announced he would hike tariffs on $US200 billion worth of Chinese goods this week and target hundreds of billions more soon, saying talks toward a trade deal with China were proceeding “too slowly” as China was attempting to renegotiate.
Trump’s remarks took Chinese officials by surprise and Beijing was considering cancelling this week’s trade talks in the US in light of his comments, the Wall Street Journal reported on Sunday night.
The most active copper contract on the Shanghai Futures Exchange (ShFE) fell as much as 3.1 per cent to 47,420 yuan ($US6,995.03) a tonne, its lowest level since January 29.
Nickel also hit its lowest since January 29 in early trade at 94,890 yuan a tonne, or a 3.3 per cent fall.
The price fall is “exactly because of Trump’s Twitter,” said a Guangzhou-based metals analyst, who is not authorised to speak to the media due to a company policy.
“I think the effect is reflected in the falls in prices for the short term, but long-term outlook still depends on the outcome of the negotiation and the action of Chinese government,” the analyst said.
ShFE copper and nickel rebounded slightly later in the session, with copper ending down 1.9 per cent at 48,010 yuan a tonne, and nickel closing 2.5 per cent lower at 95,610 a tonne.
All other metals fell.
Aluminium decreased 1.8 per cent, zinc was down 1.3 per cent, lead was 1.9 per cent lower and tin fell 0.5 per cent.
China’s central bank said it will cut the reserve requirement ratios for small and medium-sized banks effective from May 15, in a targeted policy measure to help support companies struggling amid an economic slowdown.
The London Metal Exchange was closed for a bank holiday on Monday and will reopen on Tuesday.