Shanghai copper hits over five-month high on Sino-US trade talk progress

Copper futures prices in Shanghai hit a more than five-month high on Tuesday, underpinned by progress in the trade talks between the United States and China as well as cemented bets of a U.S. rate cut.

U.S. and Chinese officials reached a framework agreement on Monday regarding short-video app TikTok, igniting hopes that a trade deal will be close.

The trade talk progress that has achieved between the world’s two largest economies bolstered market sentiment, analysts at broker Everbright Futures said in a note.

U.S. President Donald Trump and Chinese President Xi Jinpingin will have a call on Friday.

The most-traded copper contract on the Shanghai Futures Exchange was up 0.36% at 81,120 yuan ($11,396.62) metric ton, as of 0320 GMT.

The contract hit the highest level since March 28 at 81,530 yuan earlier in the session. Also, heightened bets for a rate cut by the U.S. Federal Reserve this week lifted prices, Everbright Future’s analysts added. “A cut of 25 basis points has almost been fully priced in; the market is currently focusing on whether there will be more positive signals.”

Rate cuts boost copper prices through the mechanism of a weaker dollar, combined with expectations of stronger demand, analysts at Benchmark Minerals Intelligence said in a note.

Benchmark three-month copper on the London Metal Exchange, however, retreated 0.43% to $10,142.5 a ton on profit-taking activities, said analysts.

The contract touched a 15-month peak at $10,192.5 on Monday.

Among other SHFE metals, nickel added 0.18%, aluminium shed 0.21%, tin dipped 0.49% while zinc and lead were little changed.

Among other LME metals, aluminium dropped 0.11%, nickel declined 0.2%, lead retreated 0.12%, zinc fell 0.15% while tin added 0.32%.

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($1 = 7.1179 Chinese yuan).