Metals Daily

This MorningToday and on Monday the LME is closed during the Easter Bank Holidays. What's Moving Markets?Global equities ended higher, as markets assessed corporate earnings and risks around President Trump's uncertain tariff policies. On the trade front, tariff threats on copper, semiconductors, pharmaceuticals, and lumber were yet to be confirmed by the White House, although reports indicate that negotiations with Japan were imminent. Risk was also hampered by Trump criticizing Fed Chair Powell following the latter's warning that tariffs may hamper growth and rekindle inflation. China’s openness to trade talks helped boost sentiment across the commodity complex. Gold rallied amid rising economic uncertainty. A weaker USD also provided some support. Yields on 10-year US Treasuries rose by 6bp to 4.34%, while the USD index was slightly stronger at 99.5.BHP has said the outlook for the global economy depends on China’s ability to invigorate domestic consumption, as Donald Trump’s tariffs threaten to disrupt global trade. Mike Henry, CEO of Australia’s BHP, said the direct tariff impact on the miner had been “limited”, but the potential for slower economic growth and a fragmented trading environment was a bigger issue. “China’s ability to shift towards a consumption-led economy and for trade flows to adapt to the new environment will be key to sustaining the global outlook,” said Henry. The comment from the miner echoed rival Rio Tinto’s a day earlier, when it pointed to “an uncertain future impact from tariffs on the commodity markets going forward”. China’s booming property and industrial sectors have helped drive demand for commodities including iron ore and copper over the past two decades, boosting global mining companies. Weakness in the Chinese property market has stifled the sector’s outlook over the past year, but miners including BHP have expressed confidence that China’s plan to revitalise domestic consumption and restore confidence in its economy will bolster demand.Gold ended weaker, as investors took profits after prices reached a record high earlier in the session, driven by demand for safe-haven assets amid continued uncertainty in US trade policy. Meanwhile, Fed Chair Jerome Powell said the central bank will wait for greater clarity before adjusting interest rates as he expects Trump’s tariffs to generate higher inflation and slower growth. Elsewhere, investors are closely watching prospects for US-China trade negotiations, after China expressed its willingness to resume trade talks, but under certain conditions.Base metals edged higher on the prospects of a de-escalation in the trade war between the US and China. Alcoa said President Donald Trump’s 25% tariff on metal imports has cost the company $20mn since the duties went into effect. Q125 demand supported by China stimulus and anticipated increases in European spending. Limited supply growth in Q125 globally but cost pressure on smelters has eased; as China production approaches cap, more smelter capacity will be needed outside China. Aluminium prices respond to tariffs, but uncertainty on price and demand trajectory due to tariffs. At least 5-6 aluminium smelters are needed to meet US demand, requiring additional energy production equivalent to almost 7 new nuclear reactors or more than 10 Hoover Dams, the Alcoa CEO said. "Until additional smelting capacity is built in the US, the most efficient aluminium supply chain is Canadian aluminium going into the US," he added. LME re-opens Tues 22 Apr.