METALS-Temporary US-China trade truce, weaker dollar drive copper to six-week high

By Ashitha Shivaprasad

May 13 (Reuters) - Copper prices rose on Tuesday after the United States said it would cut some tariffs on imports from China, where inventories have dropped significantly.

Benchmark copper CMCU3 on the London Metal Exchange was up 0.8% at $9,594.50 a metric ton by 1550 GMT after hitting $9,614 for its highest since April 3.

The United States said on Monday it would cut the "de minimis" tariff on low-value items imported from China, further de-escalating a trade war between the world's two largest economies.

The order comes in the wake of Beijing and Washington announcing a temporary truce in their trade spat after weekend talks, with both sides agreeing to unwind most of the tariffs imposed on each other's goods since early April.

The dollar retreated on Tuesday, after a reading on inflation was less than market expectations. A weaker U.S. currency makes dollar-priced metals more attractive for buyers using other currencies. FRX/

"Despite the optimism, there are reasons to remain cautious; the U.S.-China talks are only just beginning," said ING commodities analyst Ewa Manthey.

Manthey added that the tariffs remain significant and could impact raw material consumption, while a continued dollar rally might also pose a hurdle to metals prices.

Citi said in a note that copper prices "can remain resilient" between $9,000-$10,000 in the coming weeks amid a tightening of China's physical copper indicators until tariff-related demand shocks materialise.

Copper stocks in warehouses monitored by the Shanghai Futures Exchange (SHFE) CU-STX-SGH stood at 80,705 tons last week, having dropped 70% since the end of February.

Meanwhile, stocks in COMEX-owned warehouses HG-STX-COMEX rose to their highest levels since 2018. A pending probe in Washington that could lead to new copper tariffs is attracting metal into the United States.

Among other metals, aluminium CMAL3 rose 0.2% to $2,485 a ton, zinc CMZN3 added 1.0% to $2,707.50, lead CMPB3 and nickel CMNI3 gained 0.4% to $1,986 and $15,695, respectively, while tin CMSN3 climbed 0.6% to $32,710.