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METALS-Copper falls from two-week highs as factory activity slows

reuters.com · 09/01/2021 07:25
METALS-Copper falls from two-week highs as factory activity slows

Updates with official prices, adds jobs data

- Copper prices fell more than 2% on Wednesday after data showed that global factory activity slowed in August.

In China, by far the biggest metals consumer, manufacturing contracted for the first time in nearly 1-1/2 years. nZUN0037RQ

Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 2.2% at $9,310.50 a tonne in official trading.

However, prices are still up 20% this year after rising 26% in 2020, with analysts optimistic that demand for the metal used in power grids will increase as the world ditches fossil fuels for electrification.

Copper reached a record high of $10,747.50 in May and a 4-1/2 month low of $8,740 in mid-August.

Fundamentals have improved in recent weeks, said Citi analyst Oliver Nugent, pointing to falling exchange stockpiles, higher Chinese import premiums, lower speculative positioning and expectations for more economic stimulus. MCUSTX-TOTAL, CU-STX-SGH, SMM-CUYP-CN, 3085692MNET

"Fundamentally we think we're at the right levels," he said. "We see copper a little above $9,000 on average next year."

INDUSTRIAL OUTPUT: Global factory activity lost momentum in August as the ongoing COVID-19 pandemic disrupted supply chains. nL1N2Q30FL

JOBS: U.S. private employers hired far fewer workers than expected in August, but the labour market continues to recover steadily. nN9N2NL019

MARKETS: Global equities climbed as investors hoped for more stimulus. MKTS/GLOB

CHINA: The state reserves administration in China said it released 150,000 tonnes of copper, aluminium and zinc into the market, completing the third round of metal auctions designed to keep a lid on prices. nL1N2Q301E

NICKEL: The premium for LME cash nickel over the three-month contract has risen above $40 a tonne from about zero a week ago, pointing to tighter supply of quickly deliverable metal. CMNI0-3

PRICES: Benchmark LME aluminium CMAL3 was down 2% at $2,664.50 a tonne, zinc CMZN3 dropped 0.3% to $2,993.50, nickel CMNI3 lost 0.4% to $19,468 and tin CMSN3 was down 0.8% at $33,653 while lead CMPB3 rose 0.8% to $2,275.

(Reporting by Peter Hobson
Additional reporting by Mai Nguyen in HANOI
Editing by David Goodman)

((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))

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