Copper and Aluminium Prices Slip Amid Tariff Concerns and Market Uncertainty
Copper prices edged lower on Monday as investors awaited developments on potential U.S. tariffs and anticipated economic stimulus from China. Aluminium also retreated, reflecting market response to China's recent decision to scrap export rebates.
By 1125 GMT November 18, three-month copper on the London Metal Exchange (LME) dipped 0.1% to $8,994.50 per metric ton, extending a general decline after shedding 11% since hitting a four-month high on September 30. The market continues to grapple with uncertainty over upcoming tariffs and the broader impact of global trade tensions.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that initial optimism following recent events had faded. "The dollar stopped rallying further, adding some stability back into the market. Investors are now trying to anticipate how tariffs and trade wars will affect demand, leading to cautious trading," Hansen said.
The dollar index showed slight easing on Monday after touching a one-year peak on Friday. A softer dollar can make commodities priced in U.S. dollars more affordable for non-dollar buyers, offering some support for base metals.
Despite some industrial buyers taking advantage of recent price dips, Sandeep Daga, director at the Metal Intelligence Centre, expects this buying activity to be short-lived. He forecasts that copper prices could potentially drop as low as $7,000 per ton in the second quarter of 2025.
Aluminium on the LME fell 1.8% to $2,602.50 per ton, following a strong surge of 5.3% on Friday after China announced the removal of a 13% tax rebate for aluminium exports. While this measure is expected to reduce exports of semi-fabricated aluminium, Citi maintained its three-month price target of $2,600, suggesting that recent bullish sentiment could prove temporary.
Lead prices also fell 0.3% to $1,951 per ton after LME inventories surged by 49,500 tons, or 27%, to 234,725 tons. According to Alastair Munro of broker Marex, the significant inflow likely represented deliveries to meet short positions ahead of the November contract expiry.
Similarly, zinc saw a large inventory increase with an inflow of 11,050 tons into LME warehouses, believed to be linked to a short position delivery. LME zinc slipped 0.6% to $2,930.50 per ton, while nickel and tin prices showed minor fluctuations, with nickel down 0.5% to $15,470 and tin edging up 0.2% to $28,795 per ton.
