Make Kitco Your Homepage

METALS-Copper slips on U.S.-China concerns but vulnerable to a squeeze

Kitco News


* GRAPHIC-2019 asset returns: (Updates with closing prices) By Eric Onstad LONDON, Oct 8 (Reuters) - Copper prices slipped on Tuesday as investors worried that U.S.-Chinese trade talks would make little progress, but the metal remained vulnerable to a squeeze higher in the event of positive news due to an increase in bearish positions, an analyst said. U.S. President Donald Trump said on Monday that a quick trade deal was unlikely and Washington also blacklisted Chinese companies over Beijing's treatment of predominantly Muslim ethnic minorities. "The consensus remains sceptical about a resolution but a mini-deal, just on tariffs, might be a concrete expectation," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.


"The risk-reward now points to the upside for copper and aluminium in particular because the short positioning is elevated," he said. "This makes them vulnerable to a squeeze higher in case a truce between the U.S. and China is reached." The net speculative short position for LME copper has risen to 12% of open interest, the highest in a year, while for LME aluminium it has climbed to 31%, according to estimates by Marex Spectron, the broker's Alastair Munro said in a note.


Sino-U.S. trade talks are due to begin in Washington on Thursday, the first minister-level negotiations in several months. Three-month copper on the London Metal Exchange (LME) fell 0.8% to $5,675.50 a tonne in final open-outcry trading, trimming gains of 1.4% in the previous session.

* ANTOFAGASTA: Chile's Antofagasta has requested government mediation to resolve a contractual dispute with supervisors at its flagship Los Pelambres copper mine, the supervisors' union said.
* COPPER SPREAD: The discount of LME cash copper to the three-month contract increased to $36.90 a tonne by Monday's close, the highest since August 2018, indicating plentiful supplies in the LME system. It was last at $36.65 on Tuesday morning.
* NICKEL STOCKS: LME nickel inventories continued to fall on Tuesday to 117,522 tonnes, the lowest since August 2012.


Three-month LME nickel fell as much as 3.3% to a one-week low of $17,135 a tonne, but later pared the losses to finish at $17,570, a decline of 0.9%. It slipped for a second day after jumping 3.4% last week amid a drawdown in stocks.


* LEAD TECHNICALS: Commerzbank has upgraded LME lead and expects prices to target $2,241/$2,311.50, a note said. "LME lead's unexpected advance above resistance at $2,136.50/$2,179.50, consisting of several daily highs made in February, made us change our forecast to a bullish one."
* PRICES: LME aluminium closed 0.3% firmer at $1,751.50 a tonne, zinc added 0.4% to reach $2,298, lead slid 2% to $2,145, while tin rose 0.4% to $16,395.


* For the top stories in metals and other news, click or (Additional reporting by Mai Nguyen in Singapore and Tom Daly in Beijing, editing by Louise Heavens, David Evans and David Clarke)

Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))

LME price overview COMEX copper futures All metals news All commodities news Foreign exchange rates SPEED GUIDES ))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.