Copper edged lower overnight as investors doubted that US-China talks this week would lead to a speedy resolution of a long-running trade dispute and a recovery in metals demand.
Deputy-level talks between the world’s two largest economies are scheduled to start in Washington DC on Thursday, the US Trade Representative’s office said, paving the way for high-level talks in October.
The 14-month trade conflict has disrupted financial markets and subdued global growth and demand for metals including copper.
“The market will need to see real facts on the table before extending the gains we have seen during early September,” said Danske Bank commodities analyst Jens Pedersen, referring to the trade talks.
“The market has been fooled a couple of times, showing momentum on trade talks only to realise that it’s really difficult for the two parties to strike a deal.”
Benchmark three-month copper on the London Metal Exchange (LME) was down 1.2 per cent to $US5,796 a tonne in official open-outcry trading.
The trade row has hardened into a political and ideological battle that runs far deeper than tariffs, trade experts, executives and officials in both countries say, adding an agreement at talks this week is expected to be a superficial fix.
The US Federal Reserve is expected cut interest rates on Wednesday and close scrutiny will be paid to the central bank’s language and new economic projections given the backdrop of the trade conflict.
The slowdown in China’s economy deepened in August, with growth in industrial production at its weakest in 17 and a half years.
China accounts for about half of global demand for base metals.
Metals were under pressure from a stronger US dollar, which traded close to recent two-year highs on ongoing geopolitical risks in the Middle East.
China’s zinc output rose by 18.9 per cent year-on-year to 528,000 tonnes in August, data released by the National Bureau of Statistics showed.
Meanwhile, on-warrant LME inventories fell to the lowest since at least 1998, at 33,450 tonnes.
LME zinc fell from a six-week high touched in the previous session, down 0.9 per cent to $US2,344 a tonne.
Sirius Minerals scrapped a plan to raise $US500 million through a bond sale, sending its shares more than 50 per cent lower and delaying a project to mine for fertiliser under a national park in northern England.
Aluminium was bid down 0.8 per cent to $US1,778 a tonne, lead eased 1.4 per cent to $US2,068, tin shed 2.5 per cent to $US16,725, nickel slipped 2.4 per cent to a more than two-week low of $US16,650.