MARKET COMMENTARY
Copper prices dropped on May, pressured by concerns over the outlook for the global economy and metals demand as Washington and Beijing struggled to salvage a deal to end a bitter trade war. The trade conflict between the world's top two economies escalated on first wee on May with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing "broke the deal" by reneging on earlier commitments made during months of negotiations. Beijing has called on Washington to show "sincerity" if it is to hold meaningful trade talks, after the United States put China's Huawei Technologies Co Ltd, the world's biggest telecoms equipment maker, on a trade blacklist.
Investors remained cautious after weaker-than-expected Chinese retail sales and industrial output data. The figures for April largely pointed to a loss of momentum, after surprisingly upbeat March readings had raised hopes the economy was slowly getting back onto a firmer footing and would require less policy support.
The last week of May London copper prices find support as a new blockade at MMG Ltd's Las Bambas mine in Peru lent support to prices, although gains were capped by ongoing U.S.-China trade tensions. On 31th of May LME coper edged down to 5 months low to .$5812.5. 3m LME copper closed May with a loss of 9.5%.
London copper made weak start to June because of the negative datas. Growth in U.S. manufacturing activity slowed in May to its weakest pace in over two years as factory managers raised concerns about a trade war between the United States and China, a national survey showed. Manufacturing activity in the euro zone contracted for a fourth month in May and at a faster pace, as the U.S.-China trade war, slumping automotive demand, Brexit and wider geopolitical uncertainty took their toll, a survey showed. LME copper edged down to $5740 on 7th of June because of trade dispute, signs of slowing economic growth and dissappointing US jobsa data weakened the demand outlooks for metals.
The direction of the wind changed with strike and Fed definitions. Copper prices rose last week supported by supply disruptions as a labour strike halved output at one of the world's largest mines in Chile and Glencore's Zambian smelter shut for refurbishmentThe Codelco-owned Chuquicamata mine, which produced 320,744 tonnes of copper in 2018, headed for its fourth day of a stoppage after a failed labour deal a week before. In Zambia, Mopani Copper Mines has shut down its Mufulira smelter for major refurbishment, the Glencore-owned company said late on 17th June.
The U.S. Fed on Wednesday left interest rates unchanged as widely expected, but said the case for lower rates was building, suggesting it could ease monetary policy as early as next month amid rising trade tensions and concerns about weak inflation.The dollar index eased against a basket of six major currencies. A weaker USD offset some concerns about the upcoming U.S.-China trade talks. Reports of the call between the two presidents suggested that their meeting at the G20 would only cover strategic issues, raising concerns that an agreement was still some way off. After tested $6027 level last week, LME copper start new week with $5915-6035 band.