Copper prices tumble alongside stocks and other risk assets, as disappointing economic data from China and Europe add to mounting concerns that weakening growth at the end of this year will carry over into a sharper slowdown next year.
Comex copper for March delivery -1.2% to $2.733/lb. and are now down ~17% from their June four-year highs on fears that slower global economic growth will slow demand for materials used heavily in construction and manufacturing.
Elsewhere in base metals: aluminum -0.6% to $1,920/metric ton, zinc -1.4% to $2,529.50, tin -0.2% to $19,365, nickel -0.3% to $10,815, lead -0.7% at $1,935.50.
The materials sector is poised to get a big boost, led by industrial metals miners, after the Trump-Xi trade truce temporarily eases concerns on the global demand outlook and puts a dent on the U.S. dollar’s rise.
Copper futures +2% to a two-month high, steel prices are up as much as 7% in China, aluminum +1.9% and nickel +2.1% on the LME, and spot silver +1.7%.
Grains such as soybeans are up as much as 3.2%, wheat future +2.7%, corn +2%.
Goldman Sachs analyst Hui Shan says the truce is better than many investors had expected and predicts the industrial metals complex should react positively.
But analysts at RBC Capital warn of "significant gaps between what the U.S. thinks China has agreed and what China thinks the U.S. has agreed... A lot will depend on developments in the next 90 days, but given the U.S. and China are on different pages, we don't think the optimism can last."
Comex front-month copper prices jumped 3% to $2.712/lb. for its largest one-day increase since April after the U.S. and China announced fresh tariffs that were less severe than some investors had feared.
The U.S. 10% tariff on $200B of Chinese imports starting Sep. 24 was a measured response than the immediate 25% duty some had expected, and copper prices actually extended gains after China responded that it would retaliate with 5%-10% tariffs on $60B of U.S. goods.
On the London Metal Exchange, aluminum added 0.1% to $2,035/metric ton, zinc rose 1.3% to $2,349, tin fell 0.3% at $18,975, nickel gained 1.3% to $12,400, and lead ticked 0.2% lower to $2,067.