Copper fell on Thursday on concerns that rising U.S.-China tensions could further hurt the global economy and demand for metals, while a stronger U.S. dollar also pressured prices.
Washington on Wednesday barred Chinese passenger planes from flying to the United States from June 16, and is expected to designate at least four state-run Chinese media outlets as foreign embassies, increasing restrictions on their operations.
Traders have been worried that deteriorating U.S.-China relations could eventually hurt an existing trade deal between the world’s two biggest economies and further dampen the global economy.
Copper is often used as a gauge of global economic health.
The renewed Sino-U.S. tensions also pulled the yuan back against the dollar, indicating risk-off sentiment.
STORY CONTINUES BELOW
The dollar rebounded from its March low, reducing demand for metals traded in the greenback as they are now more expensive for buyers using other currencies.
“Base metals are no longer following equities. They are just following currencies now,” said a metals trader. “The U.S.-China tension will definitely heat up as it’s (closer to) election time.”
Three-month copper on the London Metal Exchange (LME) fell 0.8% to $5,479 a tonne by 0703 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange declined 0.4% to 44,720 yuan ($6,281) a tonne.
* OTHER PRICES: LME nickel dropped 1.8% to $12,630 a tonne and aluminum declined 0.5% to $1,561.50 a tonne. In Shanghai, aluminum rose 0.5% to 13,165 yuan a tonne and nickel fell 1.6% to 102,190 yuan a tonne.