Base metals rise amid tariff uncertainty and Chinese economic data
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Base metals traded in a narrow range on Thursday, supported by cautious sentiment as traders focused on potential tariff policies under U.S. President-elect Donald Trump and weak inflation data from top consumer China.
Market overview
Copper performance
Three-month copper on the London Metal Exchange (LME) rose 0.3% to $9,056 per metric ton by 0716 GMT, with Shanghai Futures Exchange (SHFE) copper gaining 0.6% to 74,920 yuan ($10,218.64) a ton by the end of Asia's afternoon session.
Aluminium and nickel
LME aluminium increased 0.9% to $2,521 per ton, while nickel gained 0.1% to $15,465 per ton.
On the SHFE, aluminium climbed 1.1% to 19,945 yuan per ton, and nickel advanced 0.8% to 125,510 yuan per ton.
Other metals
Zinc added 0.1% to $2,827 per ton on the LME but retreated 0.7% on the SHFE to 24,110 yuan per ton.
Lead rose 0.2% to $1,942 per ton on the LME but fell 1.5% to 16,505 yuan per ton on the SHFE.
Tin prices were flat on the LME at $30,080 per ton, while SHFE tin gained 0.2% to 252,070 yuan per ton.
Influencing factors
China's weak inflation data
China's consumer price index (CPI) rose only 0.1% YoY in December, slowing from November's 0.2% increase. Producer price deflation persisted, highlighting subdued demand in the world's largest metals market.
Tariff policy uncertainty
Market sentiment was cautious as traders awaited clarity on tariff policies that may be introduced following Trump’s inauguration. While reports suggested selective tariffs targeting sectors critical to national security, Trump denied such plans on social media.
Strong dollar pressure
The US dollar index (DXY) stood at $109.13, slightly below its two-year high of $109.25 reached on January 2.
A strong dollar, supported by rising Treasury yields, made greenback-priced commodities more expensive for non-dollar holders, capping upside momentum in base metals.
Market outlook
The metals market remains tethered to macroeconomic developments, particularly China's demand outlook and potential shifts in US trade policy. While base metals like copper and aluminium are benefiting from technical support, the stronger dollar and deflationary concerns in China may limit substantial gains in the near term.
Conclusion
Base metals saw modest gains amid tariff uncertainties and a strong dollar. Weak inflation data from China underscores persistent challenges in global demand. Traders are likely to maintain a cautious stance, awaiting further clarity on US policies and signs of demand recovery in key markets.
Market overview
Copper performance
Three-month copper on the London Metal Exchange (LME) rose 0.3% to $9,056 per metric ton by 0716 GMT, with Shanghai Futures Exchange (SHFE) copper gaining 0.6% to 74,920 yuan ($10,218.64) a ton by the end of Asia's afternoon session.
Aluminium and nickel
LME aluminium increased 0.9% to $2,521 per ton, while nickel gained 0.1% to $15,465 per ton.
On the SHFE, aluminium climbed 1.1% to 19,945 yuan per ton, and nickel advanced 0.8% to 125,510 yuan per ton.
Other metals
Zinc added 0.1% to $2,827 per ton on the LME but retreated 0.7% on the SHFE to 24,110 yuan per ton.
Lead rose 0.2% to $1,942 per ton on the LME but fell 1.5% to 16,505 yuan per ton on the SHFE.
Tin prices were flat on the LME at $30,080 per ton, while SHFE tin gained 0.2% to 252,070 yuan per ton.
Influencing factors
China's weak inflation data
China's consumer price index (CPI) rose only 0.1% YoY in December, slowing from November's 0.2% increase. Producer price deflation persisted, highlighting subdued demand in the world's largest metals market.
Tariff policy uncertainty
Market sentiment was cautious as traders awaited clarity on tariff policies that may be introduced following Trump’s inauguration. While reports suggested selective tariffs targeting sectors critical to national security, Trump denied such plans on social media.
Strong dollar pressure
The US dollar index (DXY) stood at $109.13, slightly below its two-year high of $109.25 reached on January 2.
A strong dollar, supported by rising Treasury yields, made greenback-priced commodities more expensive for non-dollar holders, capping upside momentum in base metals.
Market outlook
The metals market remains tethered to macroeconomic developments, particularly China's demand outlook and potential shifts in US trade policy. While base metals like copper and aluminium are benefiting from technical support, the stronger dollar and deflationary concerns in China may limit substantial gains in the near term.
Conclusion
Base metals saw modest gains amid tariff uncertainties and a strong dollar. Weak inflation data from China underscores persistent challenges in global demand. Traders are likely to maintain a cautious stance, awaiting further clarity on US policies and signs of demand recovery in key markets.