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Shanghai copper declines amid escalating US-China trade standoff

Shanghai copper declines amid escalating US-China trade standoff

Shanghai copper fell on Tuesday, as tensions escalated between the two largest economies in the world, China and the United States, threatening to increase demand for the metal.

As of 0315 GMT, the most active copper contract traded on Shanghai Futures Exchange fell 0.91%, trading at $8,933.60 per metric ton.

Donald Trump, the U.S. president, threatened to cut off some trade relations with China on Tuesday in relation to cooking oils as a form of retaliation for China not "purposely" buying U.S. soy beans.

Trump's threat was the latest escalation of trade tensions ahead of a high-stakes summit between Trump and his Chinese equivalent Xi Jinping in South Korea later this month.

China imposed an export control on rare earths, to which the U.S. reacted with a threat of a 100% tariff, impacting the copper, used in construction and power, that is important for the macro-economy. Both sides sent conciliation signals.

Beijing has stressed that the export control on rare earths does not represent a complete export ban. However, it is still open to talks.

Scott Bessent of the U.S. Treasury Department said that talks between leaders in South Korea were still proceeding according to schedule.

Shanghai coppe prices have dropped after the red metal reached a 16-month high on SHFE in early October, when mine disruptions such as the Grasberg closure triggered concerns about supply.

Investors are profiting from the rally triggered when Grasberg was suspended for the time being, but risks are high as China and the U.S. trade barbs over export controls and tariffs," said a Shanghai copper trader, who requested anonymity because they were not authorized to speak to media.

Benchmark three-month Copper, on the other hand rose 0.47%, to $10,628 per ton.

London's future rose amid renewed U.S. interest rate cuts hopes, as Jerome Powell, the U.S. Federal Reserve chairperson spoke on Tuesday and signaled that economic conditions were unchanged from a few weeks ago when policymakers cut rates. They also projected two further reductions this year.

Nickel and lead were little changed. Zinc also declined by 0.86%.

The LME's other metals saw a gain of 0.27% in aluminium, 0.26% in nickel, 0.24% in lead, and 0.8% for tin. Zinc, however, posted a loss of 0.37%. Reporting by Dylan Duan, Lewis Jackson. $1 = 7.1261 Chinese Yuan Renminbi

(source: Reuters)