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London copper traded above recent one-year lows on Monday after China's second-quarter growth slowed as expected, with the focus expected to shift to China's response to the latest US tariffs plan.
China's economic growth slowed in the second quarter as the government's efforts to tackle debt risks crimp activity and an intensifying trade war with the United States threatens to knock exports.
At 6.7 per cent, growth came in line with expectations, said analyst Lachlan Shaw of UBS in Melbourne, which suggests markets will now watch China for any formal response to the US's tariff plans. There is some evidence that China has begun easing credit restrictions, which would be supportive mostly for bulks and to a lesser extent to copper and aluminium, he said.
“There's been some chatter that a bit more lending is being directed to SMEs (small and medium sized enterprises) in the hinterlands around the big cities and certainly if the government takes its foot off the brake a bit, then that's probably going to end up in infrastructure.”
London Metal Exchange copper was steady at $6,232.50 a tonne by 0244 GMT, after closing little changed on Friday. Prices had last week slumped to the lowest in a year at $6,081 a tonne on concerns that an escalation in trade tariffs could dent demand. Prices have shed 14 per cent this year.
Shanghai Futures Exchange copper edged up 0.6 per cent to 49,100 yuan ($7,339) a tonne, recovering for a third trading session since last week's one-year trough.
US economy
The Federal Reserve had on Friday pointed to “solid” US economic growth during the first half of the year and also reiterated that it expected to continue to raise interest rates gradually.
China's aluminium producers are responding to tighter supply conditions by boosting output. China's June output rose 0.8 per cent to 2.83 million tonnes, which on a daily basis was the highest since June 2017, according to Reuters' calculations based on official data.
Copper speculators switched to a net short position of 12,919 contracts, the Commodity Futures Trading Commission had said last week, the weakest position since December 2016.
Prices of steel-linked metals nickel and zinc came under pressure on lower demand expectations after China's top steelmaking city, Tangshan, ordered steel mills to shut sintering plants for five days on Friday due to forecasts of heavy smog over the weekend.
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