U.S. Markets closed

Top Miner BHP Sees Initial U.S.-China Trade Deal Boosting Copper

David Stringer

(Bloomberg) -- BHP Group, the world’s biggest miner, sees moves to resolve trade tensions between China and the U.S. as likely to stimulate global growth and help spur demand for raw materials, including copper.

“A roll back of some of the tariffs, and a sense that some progress is being made is going to calm markets, stimulate some form of growth and you might expect commodities like copper” to recover, Chief Executive Officer Andrew Mackenzie told reporters Thursday in Sydney.

The U.S. and China have been trying to negotiate a limited trade deal that would entail the U.S. dropping some tariffs on Chinese imports in exchange for Beijing resuming purchases of American farm goods and other products.

The tentative signals that an initial agreement is closer are “a step in a bullish direction” for metals markets, and there are already signs that overall macroeconomic sentiment is improving, Citigroup Inc. analysts said in a Tuesday note.

“A degree of thawing, and a willingness to talk these problems through and not always rush to the tariff barrier, will be a positive development for the world economy, and for us,” Mackenzie said. BHP wins about 55% of its revenue from China, according to data compiled by Bloomberg.

Moves to decarbonize transport and other sectors through electrification should add to copper demand in the next decade, just as supply is pressured by falling grades at aging mines, according to Mackenzie. “The 2020s should create better times for copper, but when exactly -- we can’t predict that.”

Copper has declined about 10% since April amid worries over weaker demand as the world’s economic expansion cools. It fell for a second day Thursday amid an apparent lack of fresh progress in the trade talks.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net, Keith Gosman, Phoebe Sedgman

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.