METALS-Tariff-driven growth fears hit industrial metal prices

Updates prices

LONDON, Feb 3 (Reuters) - Industrial metals prices came under pressure on the London Metal Exchange on Monday, with copper hitting a four-week low, pressured by worries that U.S. import tariffs would curb economic growth and demand.

Benchmark LME copper CMCU3 firmed 0.5% to $9,098 a metric ton at 1702 GMT as bargain-hunters entered the fray after earlier touching its lowest since Jan. 6 at $8,914.50.

U.S. President Donald Trump's plan to impose 25% tariffs on Canada and 10% tariffs on China from Tuesday is widely expected to slow global economic growth and demand. U.S. tariffs on Mexican products were delayed by a month.

"We think any implementation of proposals for a universal U.S. import tariff, higher tariffs on China, as well as expected retaliatory tariffs from targeted countries will further escalate trade tensions and global growth headwinds," Citi analysts said in a note.

U.S. companies will look to the Middle East and India for metal as they seek to circumvent sweeping tariffs, industry sources said.

Levies on shipments to the United States will also fuel higher prices, seen in copper HGc2 on the U.S. COMEX exchange trading at a premium to the LME.

COMEX copper slipped 0.4% to 4.261 cents a lb, or $9,394 a ton, representing a premium of $479 over the LME price.

Elsewhere, large holdings of aluminium warrants and futures contracts and falling inventories in LME-registered warehouses are fuelling concerns about tight supplies.

This has flipped a discount for the cash contract over three-month aluminium CMAL0-3 at above $40 a ton in December to a premium around $6 a ton. Meanwhile, the premium for the March LME contract over three-month aluminium MALH25-3 rose to $18 a ton, up from $1 at the start of January.

LME aluminium stocks MALSTX-TOTAL have nearly halved to 587,200 tons since May last year.

Three-month aluminium CMAL3 gained 1% at $2,621 a ton, zinc CMZN3 rose 2.4% to $2,809, lead CMPB3 slipped 0.3% to $1,943, tin CMSN3 retreated 0.5% to $29,945 and nickel CMNI3 added 0.5% to $15,240.

Also weighing on industrial metals was the stronger U.S. currency, making dollar-priced commodities more expensive for buyers holding other currencies.

Another negative was weaker data from purchasing managers at manufacturers in top consumer China.

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