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Copper suffers 5th straight week of losses amid continued trade concerns

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Copper suffers 5th straight week of losses amid continued trade concerns

Copper suffered its fifth consecutive weekly decline in the week ending May 17, its longest run of losses since July 2018, as heightened trade tensions between China and the U.S. weighed on the metal's demand outlook.

China's Ministry of Finance said May 13 that it would raise tariffs to up to 25% on US$60 billion of U.S. goods from June 1 in retaliation for a U.S. move to hike tariffs on US$200 billion of imports from China to 25%.

On May 16, U.S. President Donald Trump issued an executive order banning Huawei from buying parts and components from American companies without his government's approval.

Bank of America Corp., Morgan Stanley and UBS all forecast that China's economic expansion may fall below 6% for the first time in almost three decades, due to the trade war. Chinese authorities indicated they could step up stimulus measures to boost the economy as weaker data released during the week suggested that growth momentum is waning.

Trump's administration also declared a national emergency and barred U.S. companies from using telecommunications equipment made by companies posing a national security risk. The president also delayed a decision on cars and auto parts tariffs from the EU and Japan by six months.

Price ring

Copper was the only base metal to finish down for the week, falling 0.6% to close at US$6,071/t. Aluminum rose 3.8% to US$1,832/t, zinc was up 1.3% to US$2,788/t, lead rose 0.2% to US$1,826/t, and nickel was up 2.6% to US$12,196/t.

The China iron ore spot import price rose 1.8% over the week to US$89.60 after Vale SA flagged a potential tailings dam collapse at the Gongo Soco mine. The steelmaking ingredient has risen 26.6% since the start of 2019 to May 17.

Gold declined 0.8% to US$1,276 per ounce during the week and has now fallen 2.1% so far this year. Silver dropped 2.6% from the prior week to US$14.40/oz.

Talking points

Haywood Securities said that whether the trend that has seen gold gradually declining since February will continue is likely to hinge on "a balance between market concerns over further tariffs imposed by the U.S. and China and whether the U.S. economy can avoid a slowdown as a result."

Ord Minnett also flagged further optimism for iron ore prices as official Chinese data showed mainland mills are producing record quantities of steel.

"China's steel output is surprising on the upside at a time when iron ore shipments remain materially affected by supply disruptions in Brazil and, to a lesser extent, Australia," Ord Minnett said.

Financings

St Barbara Ltd. raised about A$355 million from institutional investors as the first stage of its underwritten entitlement offer, which is expected to raise A$490 million to fund its Atlantic Gold Corp. buy.

Eldorado Gold Corp. executed a US$450 million senior secured credit facility comprising a US$200 million term loan and a US$250 million revolving credit facility. It also plans to offer up to US$300 million of senior secured second-lien notes due in 2024.

Trans-Siberian Gold PLC struck an agreement with VTB Bank PJSC for a loan facility of 800 million Russian rubles to fund the buyback of £7.56 million of shares from two major shareholders, including UFG Asset Management.

Greentech Technology International Ltd. aims to raise about HK$75.1 million from a placement of 1,366,000,000 new shares at 5.5 cents apiece to repay an outstanding loan from Cybernaut Greentech Investment Holding (HK) Ltd. and for working capital.

Ivanhoe Mines Ltd. fetched C$67 million as Zijin Mining Group Co. Ltd. exercised its anti-dilution rights at C$3.98 per share following Citic Ltd.'s C$612 million investment in Ivanhoe.

Alliance Mineral Assets Ltd. is raising A$32.5 million through separate institutional share placements to Galaxy Resources Ltd. and Jiangxi Special Electric Motor Co. Ltd. unit Weier Antriebe und Energietechnik GmbH.

Fura Gems Inc. plans to raise up to C$30.4 million via a private placement to advance its precious-stone projects in Columbia and Mozambique, with closing anticipated on or around June 28.