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The SHFE base metals were split into two camps during the early Asia session on Wednesday, with copper, aluminium and nickel prices edging downward, while the rest of the metals registered marginal gains.
Copper led on the downside with its most-traded September contract on the SHFE trading at 48,650 yuan ($7,268) per tonne as at 9.33am Shanghai time, down by 160 yuan per tonne or 0.3% from Tuesday’s closing price.
The United States’ protectionist rhetoric and its tit-for-tat spat with China continues to weigh on the base metals, while disappointing Chinese economic data compounds the bleak outlook for the complex.
China’s gross domestic product (GDP) growth slowed to 6.7% in the second quarter of 2018, from 6.8% in the first quarter, stoking fears of reduced metal demand in the country.
“Disappointing domestic macroeconomic statistics [from China] add to downward pressure,” Citic Futures noted on Wednesday.
Meanwhile, a firmer dollar overnight has further dented sentiment toward the base metals.
The dollar index has climbed above the 95 mark again and was recently at 95.09 on Wednesday morning – this compares with a reading of 94.51 at roughly the same time on Tuesday.
Yet the weakness in copper has been fairly limited, with the metal finding support from potential supply-side disruption amid ongoing labor negotiations in Chile.
“Months of labor negotiations between union workers and BHP’s management at Chile’s Escondida copper mine has failed to reach an amicable agreement and the possibility of an all-out strike looms,” Metal Bulletin analyst Andy Farida said.
Base metals prices
Currency moves and data releases