Copper prices steadied overnight as plans for a meeting between high-ranking US and Chinese officials in two weeks encouraged hopes for an end to the trade dispute and helped ease concern about demand prospects.
Benchmark copper on the London Metal Exchange ended little changed at $US5,780 a tonne.
Prices of the metal used by investors as a gauge of economic health fell to a two and a half week low of $US5,718 a tonne on Monday.
“A lot of the negative impact of the trade war is already built into prices of copper and other industrial metals,” said SP Angel analyst John Meyer.
“Every time the market thinks a deal may not be too far away, prices pick up.”
US Treasury Secretary Steven Mnuchin said on Monday that he and US Trade Representative Robert Lighthizer would meet Chinese Vice Premier Liu He for trade talks in two weeks.
Activity in China’s manufacturing sector is highly correlated with industrial metals demand.
Chinese authorities are in no rush to follow other countries in significantly loosening monetary policy but have ample options to help prop up slowing growth, its central bank said, maintaining a cautious approach to stimulating the economy.
Despite a slew of growth measures since last year, the world’s second-largest economy has yet to stabilise.
Analysts expect growth could cool further this quarter from a near 30-year low of 6.2 per cent hit in April-June.
The Chinese government will step up efforts to stabilise growth, Ning Jizhe, a vice head of the state planner, said on Tuesday, adding that authorities will speed up construction of investment projects and relax restrictions on car purchases.
Weaker demand for copper can be seen in data from the International Copper Study Group showing the global refined copper market recorded a 21,000-tonne deficit in June, compared with a 70,000-tonne deficit in May.
The premium for the cash over the three-month contract soared to $US205 a tonne on Friday, its highest since April 2009, on concerns about nearby supplies on the LME market.
It was last at $US115 a tonne.
The worries are due to two companies holding large amounts of nickel warrants, historically low stocks below 160,000 tonnes and cancelled warrants – metal earmarked for delivery – at nearly 60 per cent of the total .
Three-month nickel closed down 1.7 per cent at $US17,180.
Aluminium fell 1.3 per cent to $US1,762.5 a tonne, zinc was down 2.1 per cent to $US2,282, lead slipped 1.3 per cent to $US2,057 and tin lost 0.2 per cent to $US16,500.