China Metals Tumble on Recession Fears Amid Escalating Trade War
Base metal prices in China tumbled on Monday amid escalating trade war concerns and recession fears, while London metals flipped to a decline after rising on arbitrage trading.
The most-traded copper contract on the Shanghai Futures Exchange (SHFE) dropped 7.0% to 73,640 yuan per metric ton as of 0805 GMT, hovering near its lowest level in over three months since January 3.
SHFE market was closed last Friday for a holiday.
“The retaliatory tariff makes us worry about trade war, which will impede economic growth globally,” a metals trader said.
Top metals consumer China hit back on Friday with additional 34% tariffs on all US goods from April 10, after US President Donald Trump imposed a 34% tariff on most Chinese goods as part of his sweeping reciprocal tariffs.
Meanwhile, the benchmark three-month copper on the London Metal Exchange (LME) lost 0.5% to $8,733 per ton. Eearlier in the day, copper rose 3% on arbitrage trading.
“When the SHFE market opened in the morning, arbitrage traders actively traded on both SHFE and LME, capitalizing on the price gap to generate profit. Their activity increased market liquidity, which in turn pushed LME metals prices higher,” a second base metals trader said.
