The trade war between China and the US could negatively affect copper prices on the international market in the long-term, says mining expert Matthew Banda.

And Banda says global nickel prices have been projected to fetch as much as US $28,000 per tonne by 2023 owing to legislation in China, among other regions, to introduce electric cars and get rid of combustion engine vehicles.

China and the US have embarked on a full-scale trade war as both sides throw threats of new trade tariffs.

On Tuesday, July 10, President Donald Trump’s administration released a list of proposed tariffs on US $200 billion worth of goods, ranging from auto parts to construction material.

This follows the imposition by the White House on July 6 of a 25 per cent tariff on US $34 billion of imports from China, especially manufacturing components, which Beijing promptly matched with tariffs of its own, including on U.S. soya beans.

Simultaneously, copper prices on the international market have plummeted to hit almost US $6,000 per tonne, down from highs of over US $7,000 per tonne at the start of this year.

Latest data indicates that copper now fetches US $6,141.50 per tonne by end of day’s trading on Tuesday, down from US $6,650 by the end of last month, according to the London Metals Exchange (LME), before the China-US trade war officially commenced.

Commenting on the development, Banda told News Diggers! that the trade war could have a negative impact on copper prices on the international market in the long-term should the spat between Beijing and Washington DC, continue.

“For now the reduction in the prices of copper is minimal, we cannot feel the pinch. We cannot even correlate with what is happening between China and the US. But if the trade war between the two nations goes on for a long-term, then we will feel the impact,” Banda told News Diggers! in an interview, Wednesday.

“When you look at the major producers, with the situation that you have where the US and China have trade war, the US does possess quite a significant quantity and, therefore, if China is their buyer, what we are likely to see is a jump in the prices in that the demand-side is the one, which would be affected. It may not happen immediately. It may not even affect Zambia immediately because it has long-term implications. One item, which we need to be conversant is the fact that the transaction normally has long-term impacts, and not short-term ones, in that the buyer will want an assurance from the producers that they will have products maybe for 12 months or 34 months or 3 months. And what tends to happen is that scenario, in looking at the price within a certain variation, so if a variation is within a certain margin then you are not affected as a supplier, and you are not also affected as a buyer. The lower prices of copper at the international market at the moment could just be something, which happened six months back and we are getting the impact now. It would be very difficult to put a correlation like immediately what the impact could be.”

And Banda, the general manager at Mazabuka-based Munali Nickel Mine, observed that there is currently a steady increase in the prices of Nickel since legislation in China, Europe and the US was introduced to get rid of combustion engine cars was signed.

He predicted that Nickel prices would hit at least US $28,000 per tonne by 2023 from the current US $13,460 per tonne.

“For instance, we are in the Nickel industry and the Nickel has been quite low for a long time, but now it has started a movement. And the movement it has started, the presumption was done like two years back that was when the projection was done that there will be movement and the movement will be in this direction. So, if we look at the fundamentals, it shows you where the movement is going to be. And currently for Nickel, the projection is that we will actually get to somewhere about $28,000 a tonne in about 2023 going to 2025 somewhere there meaning its headed in an upward direction. When you look at the scale, that’s the prediction. And this increase is because of the battery industry,” noted Banda.

“It’s because of the legislation for battery cars. Nickel is going up because there will be a demand. One thing which happened is that Beijing in China, legislated that they wanted to get rid of the combustion engine vehicles. Their legislation was done two years back, and they have a deadline that by such a year they would have done away with combustive engine cars and started using battery vehicles and that is where we are seeing this steady increase in the prices of Nickel on the international market. The demand going up means that this product needs to be in the market and then the prices will be heading up. Not only that, there is also Europe, which is legislating for the same. Big cities in Europe are legislating for battery vehicles. Therefore, at the moment the impact is as a result of what has happened in China. I think even in the USA they said they have to get done with combustive engines. And you know that Nickel fetches two to three times compared to copper in prices.”