After the setback in Copper, the squeeze comes – Commerzbank

The Copper price dropped by around $USD on Friday after US President Trump threatened China with new tariffs of 100% starting next month, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Copper market faces tight supply amid US-China rrade uncertainty

"A renewed escalation of the trade conflict would significantly impact both economies and, therefore, two of the most important markets for Copper. While Trump adopted a more conciliatory tone over the weekend and expressed openness to negotiations — contributing to a recovery — the threat of increased tariffs and the risk of further conflict escalation remain on the table."

"For context: During the most recent peak in tensions between the US and China, in April of this year, Copper prices temporarily lost 16% of their value, falling from levels around $9,600 per ton to this year's low of about $8,100. While an agreement between the two economic powers is considered likely, it is by no means guaranteed."

"Nevertheless, the situation in the Copper market tightened further yesterday amidst the price recovery. Spot prices ended the day trading at a premium of $224 per ton over the three-month future, the second-highest level since the data series began in 1994, signaling a shortage of physical material. However, LME inventories have risen again since mid-June, though they have slightly declined in recent weeks"