Expectations of economic stimulus from top consumer China has spurred buying of copper, while mounting US-China tensions capped the upside.

US President Donald Trump on Friday said his administration will begin to eliminate special treatment for Hong Kong in response to China plans to impose new security legislation in the territory.

However Trump did not say the first phase of the Washington-Beijing trade deal was in jeopardy.

Meanwhile, China’s Premier Li Keqiang said the country had room to stimulate the economy.

“Metals are being caught between hopes of global economic recovery and fears of re-escalating trade conflict between the United States and China,” Commerzbank analyst Daniel Briesemann said.

Benchmark copper on the London Metal Exchange (LME) gained 0.9 per cent to $US5,381 per tonne by 1600 GMT, prior to the Trump comments. The metal widely used in the power and construction industries is on track for a 3.5 per cent rise this month.

“The easing of lockdown restrictions across the globe has improved the demand outlook in the near term, however, we must remember that it is coming from a very low base,” said Sucden Financial’s head of research Geordie Wilkes.

“There is a difference between improved market sentiment and underlying demand for copper.”

Copper inventories in warehouses tracked by the Shanghai Futures Exchange this week fell by the most since September 2017, exchange data showed, as demand picked up in top consumer China.

China’s imports of aluminium are about to hit their highest in a decade as an arbitrage opportunity created by demand recovery after its coronavirus outbreak makes it cheaper to buy metal from outside the country.

LME aluminium was heading for its biggest monthly gain since January 2019. It was up 0.6 per cent at $US1,546 per tonne on Friday.

Zinc rose 2.7 per cent to $US1,987 a tonne, lead added 2.3 per cent to $US1,668, tin shed 0.5 per cent to $US15,435 while nickel climbed 0.7 per cent to $US12,330.

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