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Metal has bounced 2% to $6,352 a tonne following the G20 meeting

As for almost every other metal, the copper price bounced on Monday after the US and China announced a trade truce, up 2 per cent to $6,352 a tonne.

As with nickel and zinc, the copper market has been unnerved by fears that trade tensions between Washington and Beijing would further strain a Chinese economy already showing signs of slowing. Copper has closely tracked the renminbi since June.

But a fragile truce between the US and China is not what is really animating the copper bulls. Instead, it is the prospect that a shift to cleaner forms of energy creates new demand for the metal, which is used in electric car batteries and wind turbines. At the same time, there are few large mines coming into production.

Anglo American, the miner, estimates that by 2030 there will be the need for an additional 5.6m tonnes of production capacity to satisfy the extra appetite. Those who are bullish point to falling copper inventories: stocks at the London Metal Exchange are down 45 per cent since May. Inventories of copper would only satisfy about 12 days of demand, according to Glencore.

Still, in the near term traders will be more focused on US-China tensions. “Participants on the metals markets are hardly euphoric — after all, there is too much uncertainty about whether the negotiations will actually result in the trade dispute being resolved,” analysts at Commerzbank said of Monday’s bounce.

Meeting comes as Donald Trump threatens to impose heavy import duties on European vehicles

The bosses of Germany’s three largest carmakers will meet senior US officials on Tuesday to try to ease tension with Washington over trade, with President Donald Trump threatening to impose swingeing import tariffs on European vehicles.

Chief executives from BMW, Daimler and Volkswagen will hold direct talks in the US with commerce secretary Wilbur Ross and Robert Lighthizer, Mr Trump’s top trade official.

Larry Kudlow, the president’s chief economic adviser, said the focus would be the companies’ investment into the US and their use of US-made engines. A person briefed on the automakers’ preparations for the meeting said the aim was “above all to try to calm down the atmosphere”.

The threat of US import tariffs— which would be a body blow for German carmakers — has hung over the European car industry since May, when Mr Trump launched a national security investigation into vehicle imports.

If the Commerce Department’s probe concludes that such imports are indeed a threat to national security, Mr Trump will have to decide whether to press ahead with the tariffs.

A flurry of recent presidential tweets has suggested that he might be preparing to pull the trigger, despite warnings from business of the economic damage such levies could inflict.

The tweets came in the aftermath of General Motors’ announcement last week of sweeping job cuts and plant closures in the US. Last Wednesday, Mr Trump said the 25 per cent tariff imposed on imported pick-up trucks and commercial vans from markets outside North America in the 1960s had given a big boost to US vehicle production.

He said that if the US “did that with cars coming in, many more cars would be built here . . . and G.M. would not be closing their plants in Ohio, Michigan & Maryland”.

“The countries that send us cars have taken advantage of the US for decades,” he went on. “The president has great power on this issue — Because of the G.M. event, it is being studied now.”

In a briefing with reporters on Monday, Mr Kudlow played down the possibility that Mr Trump would make good on his threat. “I know there has been talk, but I don’t think this meeting [with the German chief executives], or anything else for that matter right now, is moving towards car tariffs,” he said. “The president has said it is in his quiver of arrows sure, but none of that is changed, it is not worse or better, anything.”

The discussions with the German carmakers would cover topics including “our hope that they will continue to invest directly in the US”. But he added: “Please don’t make any assumptions on auto tariffs — yes or no. That is not what this is about.”

The meeting, which was largely instigated by Richard Grenell, the US ambassador to Germany, has caused irritation in Berlin and Brussels, which conducts trade talks for EU member states.

“We have to be clear about this — it is the European Commission which has sole responsibility for trade negotiations, not national governments, and certainly not car companies,” said Steffen Seibert, spokesman for chancellor Angela Merkel on Monday, when asked about the meeting.

The issue of car tariffs came up at the G20 summit in Buenos Aires. In his closing press conference, Emmanuel Macron, the French president, said he and Ms Merkel had raised the topic with Mr Trump at a gala dinner.

But Mr Macron said that based on his experiences with the US president, he would be very cautious about claiming that they had “convinced” Mr Trump.

Tuesday’s meeting will include Dieter Zetsche, head of Daimler, Herbert Diess, chief executive of Volkswagen, and Harald Krüger, BMW’s chief.

German carmakers have responded to the threatening noises from the White House by emphasising their commitment to the US market. BMW last week said it was considering building an engine plant in the US to supply BMW vehicles manufactured in the US and Mexico.

VW also said it was planning to build a factory in the US to make electric cars while Daimler has said it will invest $1bn in its SUV plant in Alabama. 

Despite the nervousness, there was relief in Germany over the weekend after Mr Trump suspended his decision to impose higher tariffs on Chinese imports next year. Any trade war between Washington and Beijing would have affected German cars that are built in the US for export to China.

Monday’s relief rally looked like a one-day wonder on Tuesday as stocks slid in the wake of confusing signals over U.S.-China trade talks. The yen advanced and Treasury yields dropped.

Stocks fell in Japan, Korea and Australia and fluctuated in China after media appearances Monday with Trump administration officials shed little light on the specifics of how Sino-American trade negotiations will progress. Futures on the S&P 500 Index slumped amid fading cheer about the suspension of new tariffs, and the dollar declined. The inversion of portions of the Treasury yield curve for the first time since 2007 reinforced the impression that markets are approaching the end of the current cycle.

US After Hours RH +20%, SMAR +4% are higher, while CRUS -7% and COUP -3% are lower following earnings/guidance

Nikkei -2.39% Hang Seng -0.20% CSI +0.18% Shanghai +0.38% Shenzen +0.38%

Eur$ 1.1389 CNH 6.8356 CNY 6.8412 JPY 113.08 GBP 1.2743 CHF 0.9957 RUB 66.3720 TRY 5.2451 WTI$ 53.53 .1.11%

S&P -0.49% FTSE -0.35% Dax -0.62% SMI -0.34%