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Copper prices slipped on Monday as expectations of weak demand in top consumer China were reinforced by data showing a surprise fall in its exports, but losses were limited by the likelihood of policy stimulus to shore up growth.

Benchmark copper on the London Metal Exchange (LME) ended down 0.3% to $5,815 a tonne. Prices of the metal, used widely in power and construction industries, hit $5,518 last week, the lowest in more than two years.

"The market is responding to economic slowdown due to the US-China trade war," said Guy Wolf, head of market analytics at Marex Spectron. "It's an incredibly difficult volatile trading environment, the hardest I can remember."

China's August exports fell 1% from a year earlier, the biggest fall since June. Analysts had expected a 2% rise after July's 3.3% gain.

China's central bank on Friday cut banks' reserve requirements for a seventh time since early 2018 to free up more funds for lending. Beijing is widely expected to announce more support measures in the coming weeks to avert the risk of a sharper economic slowdown including the first cuts in some key lending rates in four years.

August saw dramatic escalations in the bitter year-long trade row, with Washington announcing 15% tariffs on a wide range of Chinese goods from Sept. 1. Beijing hit back with retaliatory levies.

The world's two largest economies have agreed to hold high-level talks in early October in Washington, the first in-person discussions since a failed US-China trade meeting at the end of July.

"For the LME group to move convincingly higher, it needs to see some encouraging news on the trade front, or failing that, stronger macro data coming out of China," said Edward Meir, analyst at INTL FCStone.

"Unfortunately, the two go hand-in-hand and so as long as the trade issue is not addressed, neither can we expect to see the Chinese economy get back on track."

One company holding between 50% and 79% of lead warrants has fuelled concern about nearby supplies on the LME market.

This can be seen in the premium for the cash over the three-month lead contract at $7.5 a tonne from a discount last week.

Three-month lead gained 0.8% to $2,095.

Talk of Indonesia looking into a ban on exports of bauxite, a feed stock for aluminium, helped prices of the transport and packaging metal to three-week highs of $1,803.5 a tonne. It was last up 0.5% to $1,799.

A break of the 50-day moving average at $1,795 saw aluminium test the 100-day moving average at $1,800.

Zinc closed down 0.8% at $2,310, tin fell 0.4% to $17,300 and nickel gained 2.1% to $18,050.

Copyright Reuters, 2019


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