U.S. Trade Battle Fuels Metals' Longest Weekly Slump Since 2015

(Bloomberg) -- Base metals posted a fifth straight weekly loss in London as the trade conflict between the U.S. and China escalated, with nickel bearing heavy losses amid fears the rift will derail global growth and dent usage in China's steel-making sector.

Most metals slumped on the London Metal Exchange after U.S. President Donald Trump ordered tariffs on $50 billion worth of imports from China on Thursday, and Beijing announced retaliatory duties shortly afterward. Copper and aluminum hit fresh three-month lows and mining majors including Glencore Plc and Rio Tinto Group dropped in London. Gold rallied as investors flocked to haven assets.

Worsening trade tensions drove the longest string of weekly losses in the LME's index of six base metals since November 2015, compounding fears that a sustained spell of strong global growth may stall. Manufacturing gauges showed signs of strain this week, while in the U.S., higher interest rates and import tariffs could increase costs for consumers driving the country's economic resurgence, according to Colin Hamilton, managing director for commodities research at BMO Capital Markets.

“We're in the third year of a pretty consistent recovery in global industrial activity,” he said by phone from London. “Now I'm just a little bit more fearful that we're past the peak in the cycle.”

Nickel dropped 1.8 percent to settle at $12,950 a metric ton at 5:52 p.m. in London, following heavy losses in Chinese steel and iron ore futures. Lead declined 1.1 percent, while copper fell 0.5 percent, paring earlier losses after orders to withdraw metal from the LME rose by the most in almost 13 months. Zinc climbed, rebounding from three-month lows struck on Thursday.

--With assistance from Susanne Barton

To contact the reporter on this story: Mark Burton in London at mburton51@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter

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