August 26, 2019 / 1:54 AM / 21 days ago

METALS-Shanghai copper hits 3-week low as trade war escalates

SINGAPORE, Aug 26 (Reuters) - China’s copper futures prices fell to their lowest in three weeks, as base metals weakened due to an escalation in the U.S.-China trade war over the weekend.

U.S. president Donald Trump on Friday announced a 5% additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products.

The most-traded copper contract on the Shanghai Futures Exchange fell as much as 1% to 45,830 yuan ($6,461.48) a tonne, its lowest since Aug. 5.

China also said it will impose an extra 5% tariff on imports of copper scrap and aluminium scrap from the United States from Dec. 15, after already levying a 25% tariff on copper scrap from the United States in a previous round of duties.

“The escalation suggests uncertainty will continue to weigh on global trade, industrial production and investment, with no sign of a resolution,” ANZ said in a note.

FUNDAMENTALS

* PRICES: Shanghai aluminium fell 0.4%, zinc decreased 0.5%, lead was 0.4% lower and tin dropped 1.4% while nickel edged up 0.1%.

* LME: The London Metal Exchange is closed on Monday for a bank holiday and will reopen on Tuesday.

* HONGQIAO: China Hongqiao, the world’s biggest aluminium producer, on Friday cut its 2019 production guidance by up to 300,000 tonnes, or almost 5%, after recent flooding on its premises.

* ALUMINIUM: Analysts at Wood Mackenzie said output cuts in China would widen a deficit in China to 1 million tonnes and globally to 1.4 million tonnes, which they said could push prices above $1,800 a tonne.

* COPPER: China’s refined copper cathode imports rose 37.6% in July from the previous month to 292,201 tonnes but was down 8% year-on-year, according to Reuters calculations based on data released by the General Administration of Customs on Sunday.

* SPOT COPPER: The Qianhai Mercantile Exchange, a mainland China spot commodities platform owned by Hong Kong Exchanges and Clearing Ltd, started trading copper rods on Friday, adding to existing trade of alumina and aluminium products.

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MARKETS NEWS

* Asian shares were a sea of red as the latest salvo in the Sino-U.S. trade war shook confidence in the world economy and sent investors steaming to the safe harbours of sovereign bonds, gold and the Japanese yen.

DATA/EVENTS (GMT)

0800 Germany Ifo Business Climate New Aug

0800 Germany Ifo Curr Conditions New Aug

0800 Germany Ifo Expectations New Aug

1230 US Durable Goods July

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 7.0928 Chinese yuan renminbi) (Reporting by Mai Nguyen; Editing by Rashmi Aich)

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