Shanghai copper declines amid escalating US-China trade standoff

Shanghai copper declined on Tuesday as trade tensions between the world’s top two economies, the United States and China, escalated, risking demand growth for the metal.

The most active copper contract on Shanghai Futures Exchange HG1! was down 0.91% to trade at 85,040 yuan($11,933.60) per metric ton as of 0315 GMT.

U.S. President Donald Trump threatened on Tuesday to terminate some trade ties with China in relation to cooking oil as a retaliatory move to China “purposefully” not buying U.S. soybeans.

The threat by Trump was the latest escalation in trade tensions in the run up to a high-stakes meeting between Trump and his Chinese counterpart Xi Jinping later this month in South Korea.

China earlier imposed a rare earth export control which the U.S. responded to with a 100% tariff threat, weighing on the macro economy-sensitive copper used in power and construction, though both sides also sent conciliatory signals.

Beijing stressed the rare earth export control does not constitute a full export ban, while leaving the door open for talks.

U.S. treasury Secretary Scott Bessent, meanwhile, said talks between the leaders in South Korea are still on schedule.

The dip in Shanghai coppe futures prices comes after the red metal marked a 16-month peak on SHFE earlier in October as mine disruptions including the Grasberg suspension triggered supply concerns.

“Investors are taking profits from the rally triggered by Grasberg suspension for now, as risks are high when China and U.S traded barbs on export controls and tariff,” a Shanghai-based copper trader said, requesting anonymity as they did not have authorization to speak to the media.

Benchmark three-month copper HG1! on the other hand, was up 0.47% to $10,628 a ton.

The London future gained amid fresh U.S. rate cut hopes as the U.S. Federal Reserve Chair Jerome Powell’s speech on Tuesday signalled an unchanged economic outlook from weeks ago when policymakers lowered interest rates and projected two more cut this year.

Elsewhere among SHFE base metals, aluminium ALI1! dipped 0.38%, zinc ZNC1! declined 0.86%, nickel NICKEL1! nudged up 0.2%, with lead LEAD1! and tin FTIN1! little changed.

Among other LME metals, aluminium ALI1! gained 0.27%, nickel NICKEL1! increased 0.26%, lead LEAD1! rose 0.24%, tin FTIN1! climbed 0.8%, while zinc ZNC1! posted the sole loss, down by 0.37%.

($1 = 7.1261 Chinese yuan renminbi)