Copper Prices Surge on Trade Deal Optimism

In London, copper prices attained a nearly three-week high on Wednesday, buoyed by remarks from US President Donald Trump regarding a potential trade agreement with China, which suggested a possible easing of trade tensions. However, a strengthening US dollar served to temper more substantial gains.

The benchmark three-month copper contract on the London Metal Exchange (LME) increased by 0.4%, reaching $9,409.5 per metric ton as of 0341 GMT. Earlier in the session, it briefly touched $9,481.5 per metric ton, marking its highest level since April 3.

On the Shanghai Futures Exchange (SHFE), the most actively traded copper contract experienced a rise of 1.07%, settling at 77,770 yuan ($10,651.24) per metric ton.

President Trump indicated to reporters that he anticipates amicable negotiations with Beijing. He also suggested that tariffs on imports from China would decrease considerably following an agreement, though not be eliminated entirely.

Analysts at ING noted that Trump’s comments hinting at a reduction in China tariffs open the door for de-escalation on the trade landscape.

Further bolstering market sentiment were remarks from US Treasury Secretary Scott Bessent, which also pointed to a potential easing of trade friction between the United States and China.

Concurrently, the US dollar initially saw a sharp increase before stabilizing on Wednesday. This followed Trump’s retraction of threats to dismiss the Federal Reserve Chair and growing optimism surrounding trade deals, which improved overall market sentiment.

Impact of Stronger Dollar

A stronger dollar generally increases the cost of commodities priced in the US currency for international buyers.

Kyle Rodda, a senior financial market analyst at Capital.com, commented that a sustained recovery in risk assets and the US dollar hinges on successful deals between the US and its major trading partners, particularly China, along with a significant softening of trade policies.

Performance of Other Metals
  • LME aluminium increased by 1.09% to $2,406 a ton.
  • Lead rose by 0.4% to $1,931.
  • Tin was up by 0.5% at $31,275.
  • Zinc increased by 1.1% to $2,624.5.
  • Nickel firmed by 0.2% at $15,720 a ton.

On the SHFE:

  • Aluminium firmed 0.3% to 19,810 yuan a ton.
  • Zinc added 0.8% to 22,420 yuan.
  • Lead eased 0.4% to 16,895 yuan.
  • Nickel was up 0.2% at 125,770 yuan.
  • Tin fell 0.08% to 258,670 yuan.