Copper recovers as China output falls, strike hits mine
* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl
* Aluminium slips to 29-month low
* Strike at Codelco's Chuquicamata mine provides support
(Recasts with closing prices)
By Pratima Desai
LONDON, June 17 (Reuters) - Copper prices recovered on
Monday, boosted by a mine strike and weak Chinese output, but
other industrial metals were pressured by nervousness about the
damage to growth and demand from the U.S.-China trade dispute.
Benchmark copper on the London Metal Exchange (LME)
gained 0.5% to $5,848 a tonne in closing open outcry trading
after earlier sinking to an intraday low of $5,776.
Prices of the metal used widely in power and construction
hit a five-month low of $5,740 a tonne earlier in June.
But LME three-month aluminium finished 0.3 percent
weaker at $1,758.50 after touching $1,745, the lowest since
"Fears of decelerating global growth and recession because
of the trade war have hit sentiment in the mining sector," said
Bernstein analyst Paul Gait. "The risk-off malaise is what we
CHINA COPPER: Helping to buoy sentiment for copper was a
decline in China's refined copper output in May by 5.2% year on
year and 3.9% month on month to 711,000 tonnes.
"China may have to import more copper to meet domestic
demand," one copper trader said.
CODELCO: A strike at Codelco's Chuquicamata mine
after labour negotiations failed is also providing support for
copper prices. Codelco is the world's top producer of the metal.
TIGHT MARKET: Analysts at Morgan Stanley say the copper
concentrate market is already tight but hits to supply are
overshadowed by macroeconomic risk and trade tensions, which are
now visible in slowing copper demand.
"Year to date, not including any loss of supply from
Chuquicamata, which Codelco says can continue to operate at 50%
capacity during the strike, we estimate that supply losses are
running at close to 3% – well ahead of our 5% annual allowance,"
the analysts said.
"Weak consumer goods, automotive and electronics end-use
sectors are weighing on consumption of refined copper,
particularly impacting key exporting nations such as Japan and
TRADE: An influential Chinese Communist Party journal on
Sunday ran a commentary piece saying the United States has
underestimated China's will to fight a trade war and Beijing is
prepared for a long economic battle.
DEMAND: Recent data from top consumer China shows cooling
industrial activity, which is highly correlated with the
country's demand for industrial metals.
China accounts for nearly half of global copper demand
estimated at about 24 million tonnes this year.
DOLLAR: The U.S. dollar was modestly lower on Monday on weak
economic data, but remained near a two-week high set earlier in
A weaker U.S. currency makes dollar-denominated metals less
expensive for importers, potentially supporting demand.
PRICES: Zinc closed 0.7% firmer at $2,470 a tonne,
lead gained 1.1% to $1,886, tin lost 1.3% to
$18,950 and nickel, untraded in closing rings, was down
0.8% at $11,775 in electronic trading.
(Reporting by Pratima Desai; additional reporting by Eric
Onstad, Editing by David Goodman and Ed Osmond)
First Published: 2019-06-17 04:34:29
Updated 2019-06-17 18:34:22
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