Copper Climbs as China Plans Tax Cut

Date: March 15, 2019
Source: Wall Street Journal
LONDON -- Copper prices edged up today on the back of China’s plans to cut taxes to bolster its weakening economy.
 
The price of copper was 0.42 percent to $6,412 a metric ton on the London Metal Exchange in midmorning trade.
 
The rise came after the Chinese government announced tax cuts would go into effect April 1, with VAT coming down to 13 percent from 16 percent. The news is helping copper to be “somewhat firmer” today, according to analysts at Commerzbank. China, whose economy has been faltering in recent months amid trade tensions with the U.S., is the world’s largest consumer of industrial metals like copper.
 
Copper was also being supported by the delay of the recommissioning of two smelters at two copper mines in Chile, the Commerzbank analysts said. “The problems in Chile probably mean that several hundred thousand tons are not available to the already tight copper market,” the analysts wrote in a note today.
 
Gold prices, meanwhile, also ticked up, mainly on the back of a weaker U.S. dollar. The price of gold was up 0.50 percent at $1,302.77 a troy ounce in European trading today.
 
Dollar-denominated commodities like gold tend to have an inverse relationship with the U.S. dollar, which was down 0.13 percent against a basket of its peers, according to the WSJ Dollar Index.
 
At the same time, ongoing uncertainty over the U.K.’s withdrawal from the EU could boost gold as haven asset. “Gold will remain an option for investors if the ride gets bumpy for the divorce between the U.K. and the EU,” said Alfonso Esparza, senior market analyst at OANDA.
 
Among other precious metals, silver was trading up 0.71 percent at $15.37 a troy ounce, platinum was up 1.18 percent at $833.24 a troy ounce and palladium was up 0.59 percent at $1,568.19 a troy ounce.
 
Among other base metals, aluminum was up 0.42 percent at $1,910 a metric ton, lead was down 0.76 percent to $2,092.50 a metric ton, tin was down 0.33 percent at $21,160 a metric ton, zinc was down 0.39 percent at $2,810.50 a metric ton and nickel rose 0.70 percent to $12,995 a metric ton.
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