But market skepticism on the finality of a trade agreement continues to pervade the market despite bullish assertions made by US president Donald Trump that China is looking to make a deal imminently.
“They’re paying billions and billions and they want to make a deal badly,” Trump said at the Turning Point USA Student Action Summit on Tuesday.
“Many pundits may disagree with that statement, and suspect the urgency may be on the US side. But, there is a general feeling of expectation and a chance that we will see reciprocal concessions from both sides,” John Browning of Bands Financial said.
And the market has acted accordingly on Wednesday, with the LME’s three-month base metals all making marginal gains with the exception of tin, which is trading down a slight 0.2% around $17,630 per tonne on the previous day’s kerb close.
The LME three-month copper price held above the $6,000-per-tonne resistance level while cash selling continues despite a modest 2,913 lots traded by 9.30am on Wednesday.
The red metal’s three-month price trajectory is seemingly ignoring a 2,600-tonne inflow into LME warehouses in Gwangyang and Rotterdam as of 9am, though a further 5,300 tonnes of material was freshly canceled however, hinting at speculative demand.
“Copper, as a bellwether of the economy, is being traded as a proxy for macroeconomic sentiment,” a European trader told Fastmarkets.
“Trade talks in China and the United States are carrying far more weight than stock movements or any other fundamentals or forces majeures such as strike action do at the moment,” he added.
Market participants are of the opinion that if the three-month copper contract traded on fundamental supply and demand factors the price would be higher still, despite the current macro backdrop having kept the price buoyed above $6,000 per tonne.
Other highlights
- The dollar index is up 0.06% at 97.75 and despite precipitating lower buying volumes, has failed to exert a dampening influence of upward price action across LME-traded base metals this morning.
- The LME three-month nickel contract has risen 1.3% to around $14,355 per tonne during morning trading and continues to hold above $14,000 per tonne despite the recent price rally – where the price breached $15,000 per tonne – fading after Chinese short-stop buying ebbed.
- In European data on Wednesday, manufacturing purchasing managers’ index (PMI) data from France and Germany disappointed at 50.0 (versus 51.9 previously) and 43.1 (versus 45.0 previously) respectively, further enforcing reports of weakening in the major European economies.