US-China trade standoff finds respite with trade truce prolongation, boosting copper market sentiment.
Headline: US-China Tariff Truce Extension Bolsters Industrial Metals Market
The US-China tariff truce extension, signed on August 11, 2025, has provided a breath of relief to the global industrial metals market. The 90-day reprieve has halted planned tariff hikes that could have significantly increased US duties on Chinese goods and Chinese retaliatory tariffs.
The extension offers businesses predictability during the critical holiday trade season, enabling smoother supply chain and inventory planning. Market participants and analysts view this truce as a positive signal, laying the foundation for further high-level talks and a potential summit later in 2025, which could eventually ease trade frictions more broadly.
This temporary pause in tariff escalation mitigates shock risks that could suppress industrial metals demand tied to manufacturing and infrastructure sectors reliant on China-US trade. As a result, the extension fosters a favorable near-term outlook for these markets, averting sharp tariff increases that would disrupt trade flows and industrial activities.
In the realm of specific metals, nickel prices have retreated 1.1% to $15,180 a ton, while lead prices have climbed 0.5% to $2,008.5. On the other hand, aluminium prices have risen 0.8% to $2,610, and tin prices have firmed 0.1% to $33,825. The benchmark copper price on the London Metal Exchange is trading 0.2% higher at $9,751 a metric ton, with zinc prices increasing 0.4% to $2,834.5.
The current rise in LME inventories of copper, now at 155,000 metric tons, up more than 70% since late June, is easing concerns about availability. The discount between the LME cash copper contract and the three-month forward has widened to $84 a ton, its highest since February.
Meanwhile, the Yangshan copper premium, a gauge of China's appetite for importing copper, is currently at $45 a ton, down from levels above $100 a ton in May. This decrease suggests a lessening demand for copper imports in China.
Signs of easing price pressures in the United States may reinforce expectations for the Federal Reserve to cut interest rates next month. A potential interest rate cut could weaken the U.S. currency, potentially boosting demand for dollar-priced metals.
Clues to demand prospects for industrial metals in China are expected from upcoming data releases on loans, house prices, investment, and industrial production. Traders indicate that volumes are low due to the summer lull, but the extension of the tariff truce is expected to support demand ahead of the seasonal autumn import surge for goods such as electronics.
In summary, the extension of the US-China tariff truce has a stabilizing effect on the industrial metals market, averting sharp tariff increases that would disrupt trade flows and industrial activities. This fosters a favorable near-term outlook for these markets while negotiations continue.
- The US-China tariff truce extension might encourage traders to invest in stocks, as a potential interest rate cut by the Federal Reserve could lead to a weaker US dollar, boosting demand for dollar-priced metals.
- Meanwhile, the decrease in the Yangshan copper premium suggests a lessening demand for copper imports in China, which could have an impact on the prices of other industrial metals, including stocks of stocks tied to the manufacturing and infrastructure sectors.
