METALS-Copper falls as Trump's comment on China sparks trade war fears

By Polina Devitt

LONDON, Oct 10 (Reuters) - Copper prices fell on Friday after U.S. President Donald Trump said Washington was calculating a massive increase in tariffs on Chinese imports, inflating fears of a trade war between the world's two largest economies.

Three-month copper on the London Metal Exchange CMCU3 lost 3.8% to $10,450 a metric ton by 1600 GMT. It hit $11,000 on Thursday, moving closer to its all-time peak of $11,104.50 set in May 2024.

Trump's comment did not mention industrial, growth-dependent metals in any form, but did mention rare earth elements.

China dramatically expanded its rare earths export controls on Thursday, adding five new elements and extra scrutiny for semiconductors, as Beijing tightened control over the sector ahead of talks between Trump and Xi Jinping.

"I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so," Trump said in a social media post.

Investors have piled money into copper after Freeport FCX.N declared force majeure at its major Grasberg mine in Indonesia at the end of September. Supporting supply risks, data showed on Thursday that copper output from Chile's Codelco dropped 25% in August after a deadly collapse stunted output from its mine.

However, a lack of any significant improvement on the demand side helped to limit the rally in copper, used in power and construction.

"Demand is not great for most of the industrial metals," said BNP Paribas analyst David Wilson. "To have a sustained bull cycle in the industrial commodities, you usually need a positive demand story."

In top metals consumer China, copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 15% from late September, while the Yangshan copper premium SMM-CUYP-CN, which reflects demand for copper imports, was steady at $49 a ton, its lowest since August 19.

Lead CMPB3 was 0.8% lower at $2,014 a ton, ignoring the LME daily data showing that 118,000 tons of the metal were marked as being prepared for delivery out of LME-registered warehouses, taking cancelled stocks to 70% of the total. 0#MPBSTX-LOC

LME aluminium CMAL3 fell 1.9% to $2,744, zinc CMZN3 lost 0.6% to $2,992.50, nickel CMNI3 dropped 2.1% to $15,160, while tin CMSN3 slid 4.0% to $35,570.