Industrial Metals Slide on Reignited Trade Fears
June 19 2018 - 10:45AM
Dow Jones News
By Georgi Kantchev and Amrith Ramkumar
Prices of copper and other industrial metals used in
construction slid on Tuesday as trade tensions between the U.S. and
China continued to escalate.
Copper for July delivery dropped 1.6% to $3.0580 a pound on the
Comex division of the New York Mercantile Exchange. Prices were on
track for their sixth decline in the past seven sessions, and have
tumbled since hitting their highest level of the year earlier this
month, with some investors worried that protectionist trade
policies will slow the global economy and weaken commodity
demand.
President Donald Trump late Monday threatened new tariffs on
Chinese goods worth $200 billion. The move followed levies on $50
billion in Chinese imports to the U.S., enforced late last week
aimed at punishing China for unfair trading practices.
"Fears around a potential trade war between China and U.S.
resurfaced," hitting copper prices, said Sam Crittenden, analyst at
RBC Capital Markets.
Copper and other commodities have until recently been relatively
resilient in the face of trade tensions. But a full-blown trade war
between the world's two biggest economies is a potential hazard to
demand for raw materials, as China is the world's largest commodity
consumer.
Elsewhere in base metals Tuesday, aluminum for delivery in three
months on the London Metal Exchange declined 1.2% to $2,194.00 a
metric ton. Nickel, zinc, tin and lead futures also dropped.
Heightening trade worries coincided with a strengthening dollar
and a more-hawkish Federal Reserve, which raised rates last week.
Many commodities are priced in dollars, and when the U.S. currency
strengthens, they become more expensive to foreign investors.
On Tuesday, the WSJ Dollar Index, which measures the currency
against a basket of its peers, was up 0.3%.
Among precious metals, gold for August delivery edged down 0.2%
to $1,277.30 a troy ounce. A stronger dollar and worries about
higher interest rates boosting Treasury yields and making the metal
less attractive have recently pushed prices to their lowest level
of the year.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
(END) Dow Jones Newswires
June 19, 2018 10:30 ET (14:30 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.