LONDON- Copper slumped to the weakest in more than two weeks on Friday, weighed down by worries about a trade war in retaliation to fresh US tariffs, which could hit economic growth in top metals consumer China and elsewhere in the world.
Three-month copper on the London Metal Exchange (LME) dipped 0.1 percent to $9,376 a metric ton in official open-outcry trading, its weakest since February 12. It was set for a 2 percent weekly decline.
US President Donald Trump on Thursday threatened to slap an extra duty of 10 percent on imports from China in addition to a tariff of 10 percent levied on February 4.
Trump also said his proposed 25 percent tariffs on Mexican and Canadian goods would take effect on Tuesday, disappointing some investors hoping for a delay.
“There’s not a huge amount of clarity, but the tariffs could be cumulative, and I think the working assumption is yes,” said Nitesh Shah, commodity strategist at WisdomTree.
“The aluminum and steel tariffs, are they on top of what’s already applied on Canada and Mexico? If so, you’re talking about 35 percent tariffs on aluminum, which is pretty punitive.”
“So I think a lot of metals are suffering as a result.”
Trump has imposed 25 percent tariffs on steel and aluminum, while Canada supplies the bulk of US imports of the latter.
Concern about an escalating trade war sent a chill through wider financial markets, hitting stocks and sending the dollar to near multi-week highs.
A strong dollar makes commodities priced in the US currency more expensive for buyers using other currencies.
Investors were also eyeing China’s National People’s Congress meeting scheduled for March 5.
“China is pretty much playing the same strategy for the last three years now. It’s very much piecemeal stimulus, nothing massively game-changing,” Shah said.
Weak demand was reflected in a further rise in copper inventories in warehouses monitored by the Shanghai Futures Exchange, adding 3.2 percent over the past week to the highest in six months.
LME tin dropped 1 percent to $31,400 a ton after news emerged that Myanmar’s Wa State is considering allowing mining to resume in the tin-rich region. Myanmar is the world’s third-largest producer.
Among other metals, LME aluminum eased 0.6 percent to $2,618 a ton, zinc shed 0.4 percent to $2,798, nickel lost 1.2 percent to $15,650 and lead was down 0.1 percent at $2,005.
