Copper prices rose overnight as news that US officials would travel to China next week to resume trade talks helped to boost sentiment in industrial metals markets under pressure from concerns over growth and demand.
Benchmark copper on the London Metal Exchange ended up 0.5 per cent at $US5,999 a tonne.
Prices of the metal used widely in the power and construction industries touched a six-month low at $US5,740 in June.
“The deepening rift between the United States and China has been a headwind for metals. There needs to be a resolution to the trade dispute,” said SP Angel analyst Sergey Raevskiy.
“But the Chinese are being careful, they have provided stimulus and will probably do more if necessary. There isn’t much downside from here for copper.”
US and Chinese negotiators will restart trade talks in Shanghai on July 30 “aimed at improving the trade relationship between the United States and China,” according to the White House.
US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer will lead the US team while Chinese Vice Premier Liu He will lead negotiations for China.
Demand for base metals is highly correlated with manufacturing, which shrank in China last month.
China’s central bank governor Yi Gang said current interest rates are appropriate, financial magazine Caixin reported on Tuesday.
China accounts for about half of global copper consumption estimated this year at about 24 million tonnes.
“We expect prices to remain subdued this summer,” Citi analysts said in a note.
“Further China easing should see prices start to move higher by the autumn, reaching around $US6,600 a tonne by year-end.”
Citi’s base case is for a small copper market deficit this year.
“Inventory levels are moderately lower than their long-run average level,” Citi analysts said.
“However, the market is not expected to get tight enough to disconnect from global macroeconomic developments.”
Stocks of copper in LME-registered warehouses, at 295,000 tonnes, are significantly higher than in March, when levels were close to 111,000 tonnes.
Receding worries about copper supplies on the LME market can be seen in the wider discount for cash metal over the three-month contract.
The discount was at $US19 a tonne at Wednesday’s close, against $US2 a tonne on July 15.
Prices of the soldering metal hit three-year lows at $US17,500 a tonne as funds added to short positions.
It closed up 1.4 per cent at $US17,925.
Aluminium was up 0.6 per cent at $US1,826 a tonne, zinc climbed 1.1 per cent to $US2,459, lead gained 2.7 per cent to $US2,085 and nickel added 2.7 per cent to $US14,550 a tonne.