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Shanghai Copper falls as tensions between China and the US escalate

Shanghai copper fell on Monday as trade tensions between China and the United States escalated after President Donald Trump threatened to increase tariffs sharply.

In response to Beijing's recent expansion of its controls on rare earth exports, the U.S. President threatened on Friday to impose a 100% additional tariff on imports coming from China as well as new export controls for critical software.

China blamed Trump for the escalation on Sunday, accusing him of hypocrisy. Beijing has not taken any further countermeasures in advance of a possible meeting between Trump, the Chinese president Xi Jinping, and South Korea's President Moon Jae-in later this month, which Trump had threatened to cancel.

The Shanghai Futures Exchange's most active copper contract closed the daytime trade down 1.77% at 85,000 yuan per metric tonne ($11,919.45).

The benchmark three-month price of copper at the London Metal Exchange rose 0.92%, to $10,615 per ton, by 0708 GMT. It had fallen over 3% the previous session.

Analysts at Chinese broker GF Futures say that the price of copper is rising due to the short term impact of Trump’s tariff threat. However, supply issues caused by a series mine disruptions are continuing to support its price.

After Freeport declared force majeure last month at its flagship Grasberg Mine in Indonesia, investors have been buying copper.

Aluminium fell by 0.9% among SHFE's base metals. Zinc dropped by 0.52%. Nickel tumbled by 1.91%. Tin fell 2.2%. Lead was the only metal to gain, gaining 0.15%.

The LME metals market saw aluminium up 0.31%. Zinc was up 0.55%. Nickel fell 0.36%. Lead dropped 0.62%. Tin fell 1.21%. $1 = 7.1312 Chinese Yuan Renminbi (Reporting and editing by Eileng Soreng and Ronojoy Mazumdar).

(source: Reuters)