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Citigroup cuts copper forecast on tariffs risk, China outlook
The bank has cut its short-term outlook for copper prices by 11% to $8,500 a ton over the next three months.
Prices of China’s steel-making raw materials dropped on Wednesday after the top steelmaking city of Tangshan maintained the highest smog alert amid unfavourable weather conditions, while the government vowed to extend its anti-smog measures.
The level 1 alert, the highest in China’s four-tier pollution warning system, has been in place since March 1 and requires steel mills to curb output by 40 percent-70 percent or even stop production, depending on the scale of their emissions.
The most-traded iron ore contract on the Dalian Commodity Exchange fell as much as 1.2 percent to 610 yuan ($90.86) a tonne, and stood at 610.5 yuan by the end of the session.
Coking coal edged 0.8 percent lower to 1,266.5 yuan a tonne, while coke dipped 1.1 percent to 2,063.5 yuan.
The most-traded iron ore contract on the Dalian Commodity Exchange fell as much as 1.2 percent to 610 yuan ($90.86) a tonne
Steel prices were also lower, with the most-active construction steel rebar on the Shanghai Futures Exchange down 1.2 percent at 3,737 yuan a tonne. Hot rolled coil , used for cars and home appliances, dropped 1.6 percent to 3,708 yuan.
Trading, however, was muted for most of the day, with prices swinging between gains and losses, while investors awaited more directional clues, including progress in the Sino-U.S. trade talks.
There was “no strong direction, as markets await updated U.S.-China trade news”, ANZ Research said in a note.
U.S. President Trump will reject a trade deal with China that is not perfect, but the United States would still keep working on an agreement, U.S. Secretary of State Mike Pompeo said, according to a transcript of a media interview released by the State Department on Tuesday.
Despite some recent “positive” developments regarding the trade deal negotiations, the market is not discounting the possibility of “further tensions” between the world’s two biggest economies, said Darren Toh, steel and iron ore data scientist at Singapore-based Tivlon Technologies.
“There’s nothing to speculate on at the moment, and some construction activities may have been suspended, while the NPC meeting is going on,” said analyst Richard Lu of CRU in Beijing, referring to the National People’s Congress, China’s parliament.
Delegates to the annual NPC gathering will meet in Beijing this week to discuss political and economic policies.
China’s top steelmaking city of Tangshan has extended a level 1 smog alert that was due to be lifted on Wednesday as unfavourable weather conditions persist.
China will extend winter anti-smog measures such as production cuts and traffic restrictions for a third successive winter, the environment ministry said in a pollution battle plan for 2019 published on Wednesday.
($1 = 6.7138 Chinese yuan)
(Reporting by Enrico dela Cruz; Editing by Shreejay Sinha and Sherry Jacob-Phillips)
