METALS-Copper steadies amid tariff uncertainty

By Polina Devitt

LONDON, June 3 (Reuters) - Copper prices steadied on Tuesday as uncertainty about U.S. tariffs policy kept the premium of U.S. copper futures against the London benchmark high, offsetting weaker-than-expected factory activity in top metals consumer China.

Benchmark three-month copper on the London Metal Exchange CMCU3 rose 0.1% to $9,622.50 per metric ton by 1631 GMT.

The most active U.S. Comex copper futures HGc2 fell 0.5% to $4.8355 a pound, meaning the premium against the LME benchmark was $1,037 a ton.

Comex futures hit $4.9495 on Monday, the highest since April 3, on concerns that U.S. President Donald Trump's plan to double tariffs on steel and aluminium imports to 50% starting on Wednesday would mean that new U.S. copper tariffs, subject to an ongoing investigation in Washington, were more likely.

Limiting copper's growth on Tuesday was data showing that China's factory activity shrank for the first time in eight months and a stronger dollar. FRX/

The Caixin/S&P Global manufacturing PMI fell to the lowest reading in 32 months, a private-sector survey showed. On Saturday, China's official PMI showed May factory activity fell for a second month.

With U.S. manufacturing also contracting in May, traders were waiting for a possible call between Trump and Chinese leader Xi Jinping. According to the White House, they were likely to speak this week.

Providing support to LME copper were continuing outflows from stocks in LME-registered warehouses. LME's daily data showed inventory fell to 143,850 tons, the lowest in almost a year, after 4,600 were delivered out.

The spread between the cash price and the three-month copper contract CMCU0-3 was last at a premium of $51 a ton, indicating concerns about nearby supply in the LME system.

The concerns are partly related to Ivanhoe Mines' IVN.TO Kakula mine in the Democratic Republic of Congo, which was hit by seismic activities that caused flooding underground.

With Ivanhoe's plan to restart a section of the mine in June, the net loss of production from the mine is expected to be 84,000 tons over four months, Alice Fox, commodities strategist at Macquarie, said in a note.

Among other LME metals, aluminium CMAL3 was steady at $2,467 a ton, zinc CMZN3 added 0.2% to $2,702.50, lead CMPB3 gained 0.1% to $1,982, tin CMSN3 climbed 2.2% to $31,330, while nickel CMNI3 lost 0.5% to $15,460.

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