August 5, 2019 / 4:17 AM / in 3 months

METALS-Copper drops to 2-year low on trade war; nickel at 4-year high

(Updates prices)

By Mai Nguyen

SINGAPORE, Aug 5 (Reuters) - London copper hit its lowest in more than two years on Monday after a trade war between the United States and China escalated, while Shanghai nickel prices hit a four-year high on renewed concerns of an export ban in Indonesia.

U.S. President Donald Trump last week said the United States would impose more tariffs on Chinese imports, and China on Friday vowed to fight back, ending a month-long trade truce between the world’s two biggest economies.

Three-month copper on the London Metal Exchange tumbled to as low as $5,640 a tonne, its lowest since June 2017. The most-traded copper contract in Shanghai ended down 0.8% at 46,060 yuan ($6,551.83) a tonne.

“It (the trade war) is likely to weaken demand for base metal because China has retaliated today by allowing the Chinese yuan to weaken in line with the fundamentals,” said Jeff Ng, Continuum Economics’ chief economist for Asia.

“Going forward this means there will be more rounds of tariffs and protectionism against each other between the two largest economies, which signals lesser demand for commodities including base metals,” Ng said.

Shanghai’s nickel prices surged to 119,360 yuan a tonne, their highest since May 2015, while London nickel rose as much as 2.5% to $14,805 a tonne, amid renewed worries of an ore export ban from major nickel producer Indonesia.

“Some people said Indonesian may advance the ore ban from 2022 to this year. I’m not sure how true it is, but some investors will gamble on this to buy nickel,” said a nickel analyst.

Indonesia, which is a major source of nickel ore used mainly in the stainless steel industry, had said it would restrict exports of unprocessed ore from 2022.

FUNDAMENTALS

* YUAN: China on Monday let the yuan tumble beyond the key 7 per dollar level for the first time in more than a decade, in a sign Beijing might be willing to tolerate further currency weakness amid an escalating trade row with the United States.

* PRICES: London aluminium dipped 0.2%, zinc rose 0.5%, while lead eased 0.1% and tin edged down 0.2%. In Shanghai, aluminium advanced 0.5%, zinc increased 0.8%, while lead dropped 0.2%.

* BHP: BHP Group will face a test of its ability to move beyond bulk mining over the coming year with a foray into specialty chemicals for the battery industry at its once struggling Nickel West division.

* HKEX: Hong Kong Exchanges and Clearing is due to start trading in six dollar-denominated London metal mini futures on Monday in aluminium, zinc, copper, nickel, tin and lead.

* For the top stories in metals and other news, click or

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 7.0301 Chinese yuan)

Reporting by Mai Nguyen; Additional reporting by Tom Daly in Beijing; editing by Rashmi Aich and Richard Pullin

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