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Base metals decline as Trump's tariffs increase demand concerns

Investors feared that the new U.S. broad tariffs could halt global growth and impact industrial metal demand. Base metals dropped in London on Thursday, with copper reaching its lowest level in over three weeks.

By 0909 GMT, the benchmark three-month price of copper on London Metal Exchange (LME), which had hit $9,485, was down by 1.6% to $9,546.50 a metric tonne.

Markets are taking into account the potential negative impact of tariffs on demand and the possible responses from other major trading partners. "We expect the downward trend to continue, at least for the short term," said BNP Paribas' analyst David Wilson.

Citi predicts that copper will fall to $8,500 in the third quarter as tariff increases impact global growth expectations, consumption prospects, and risk appetite. BNP Paribas predicts the same level during the second quarter.

On Wednesday evening, Donald Trump announced a reciprocal tariff that would raise import taxes to their highest level in over a century.

The tariffs also include an additional 34% on imports of metals to the United States from China, which is the largest consumer of metals in the world. China's Foreign Ministry called on the United States "to correct its wrongdoing".

The White House did not include copper for which the U.S. Administration is currently conducting a separate investigation into possible new tariffs as well as aluminum and steel that are already subject to 25% duties.

The reciprocal tariffs will not apply to "other minerals" that are not produced in the U.S.

LME aluminium fell 0.5%, to $2.478 per ton, after reaching $2.448, its lowest level since September 13.

A metals trader said that the contract, which has fallen for 11 straight sessions, is being pressured by Commodity Trading Advisors, funds that track momentum using computer models. He believes that this activity will soon fade.

Lead fell 0.5% and zinc dropped 1.1% on the LME. Both reached their lowest levels in two months. Nickel dropped 0.5% to $15,880, after reaching a 1-month low.

LME Tin was down 3.4% to $36,620. On Wednesday, it hit $38,395, the highest since May 2022. This was due to short-covering as investors feared that the recent earthquake in Myanmar could delay mining and exports. (Reporting from London by Polina Devitt; Additional reporting in Shanghai by Violet Li; Editing by Sharon Singleton).

(source: Reuters)