September 12, 2019 / 10:33 AM / 8 days ago

METALS-Copper rises to 6-week high as Trump delays tariffs

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices, adds talks)

By Zandi Shabalala

LONDON, Sept 12 (Reuters) - Copper jumped to its highest level in six weeks on Thursday after the United States said it would delay imposing a new round of tariffs on China, raising hopes of a thawing of tensions that could bode well for demand for the metal.

U.S. President Donald Trump welcomed China’s decision to exempt some U.S. anti-cancer drugs and other goods from tariffs and announced a short delay to scheduled tariff hikes on Chinese goods.

The world’s two largest economies have levied tariffs on hundreds of billions of dollars worth of goods in a bitter trade war that has raised the spectre of a global recession, with further tariffs slated to take effect in coming months.

Copper, mainly used in power and construction, is seen as a bellwether for the health of the global economy and has suffered amid softer growth. It is also mainly consumed in China.

“Sentiment from market participants is a little bit better due to the news in the trade dispute between the United States and China,” said Commerzbank analyst Daniel Briesemann.

But he cautioned that Thursday’s gains may be short lived. “We have seen some signs of easing in the trade dispute on a number of occasions, however in each case these hopes were always disappointed.”

Benchmark copper on the London Metal Exchange (LME) gained 1% to $5,832 tonne after touching its highest level since Aug. 1 at $5,898.

STIMULUS: Copper prices dropped briefly after the European Central Bank promised an indefinite supply of fresh asset purchases and cut interest rates deeper into negative territory in an effort to prop up the ailing economy.

“The short term macro drivers of weakening global growth and the fact that the real economy is suffering has taken the reigns in prices,” said BMO analyst Kash Kamal.

TALKS: Lower-level U.S. and Chinese officials are expected to meet within days in Washington ahead of talks between top trade negotiators in early October.

INVENTORIES: Headline copper inventories in LME-approved warehouses eased 5,475 tonnes to 299,750, the lowest in a month. But that is still about 97% higher this year. MCUSTX-TOTAL

SPREADS: The discount of LME cash copper over the three-month price hit $34 a tonne, its biggest since May 22, signalling plentiful supply. CMCU0-3

STOCKS: On the LME, the world’s largest and oldest metal trading platform, on-warrant stocks of nickel available to the market fell 5,718 tonnes to their lowest since Dec. 2008, at 77,628 tonnes. MNISTX-TOTAL

SPREADS: This helped to propel the premium of cash nickel over the three-month contract to $102 a tonne, just below the decade-high of $104 seen on Aug. 30. CMNI0-3

OTHER METALS: Aluminium ended 1.2% lower to $1,803 a tonne, zinc eased 0.7% to $2,347, lead shed 0.8% to 2,090, while tin lost 3.7% to $17,125 and nickel added 0.5% to $17,990. (Additional reporting by Tom Daly; Editing by Pravin Char, Elaine Hardcastle, David Gregorio and Ken Ferris)

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