METALS-US-China tariff pause drives base metals towards early April price levels

By Ashitha Shivaprasad and Polina Devitt

May 14 (Reuters) - Copper, aluminium and zinc prices rose to their highest since early April on Wednesday as a 90-day pause agreed by Beijing and Washington on most of their tit-for-tat tariffs raised risk appetite in growth-dependent metals, for now.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was steady at $9,600.50 a metric ton by 1607 GMT after hitting $9,664 for its highest since April 2.

U.S. President Donald Trump's self-styled "Liberation Day" on April 2, when he announced tariffs against all countries, caused a sharp fall in LME metals on April 3 on concerns that a trade war could cause a global recession and damage demand.

Those concerns began to ease with the tariff truce announcement this week and gained another layer of support on Wednesday as Goldman Sachs raised its China 2025 GDP growth forecast to 4.6%, up from the previously expected 4%.

"Investors have rotated away from safe havens like gold back into the industrial space," said Panmure Liberum analyst Tom Price. "However, they are not re-engaging the market in a vigorous way at this early stage ... they are wondering what Trump is going to do next."

Providing further support, the dollar extended losses after weaker than expected U.S. consumer inflation data bolstered the case for Federal Reserve cuts to interest rates. FRX/

In top metals consumer China, outstanding total social financing, viewed as an indicator of future industrial metals demand, increased 8.7% in April to hit a 13-month high after more government bond issuance.

The market focus remains on a investigation into potential new tariffs on copper imports that the U.S. has been conducting since February. As a result, the premium on COMEX copper futures over the LME benchmark LMECMXCUc3 is elevated and deliveries have been made to the COMEX copper stocks. HG-STX-COMEX

The premium reached a peak of 18% in late March and has fallen to about 10%, with copper inventories at COMEX-owned warehouses rising 77% since the end of February to 165,112 tons.

Morgan Stanley estimates that the U.S. has imported an extra 180,000 tons of copper over the past seven weeks, of which only 65,000 have shown up in COMEX inventory so far, "with more to come, leaving a tariff-free buffer of metal".

Aluminium CMAL3 rose 1.4% to $2,524.50 a ton after hitting $2,543.5 for its highest since April 1.

Short or bearish positions on the LME are being cut or rolled over ahead of the expiry of contracts next week, providing price support, one trader said.

The spread between the cash LME aluminium contract and benchmark three-month futures CMAL0-3 swung to a premium for the first time since March and was last at $1 a ton, compared with a discount of $28 a week ago.

Among other metals, zinc CMZN3 added 1.9% to $2,757 a ton, lead CMPB3 gained 0.1% to $1,989.50, tin CMSN3 firmed by 0.5% to $32,820 and nickel CMNI3 was up 0.9% at $15,870.

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