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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 prices, adds North America factory data, column

- Copper prices fell sharply on Wednesday after data showed that factory activity slowed in August across swathes of Asia and Europe.

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 1.9% at $9,339.50 a tonne at 1601 GMT.

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."

INDUSTRY: Factory activity lost momentum in most of Asia and Europe in August but accelerated in the United States and Canada. nL1N2Q30FL nN9N2NL018 nZON003U5V

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 rose to new highs as investors predicted 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 surged as high as $100 a tonne - the highest in two years - from about zero a week ago, pointing to tighter supply of quickly deliverable metal. CMNI0-3

COLUMN: China is battling with aluminium's decarbonisation paradox, writes Reuters columnist Andy Home. nL8N2Q33Q9

PRICES: Benchmark LME aluminium CMAL3 was down 1.1% at $2,688.50 a tonne, zinc CMZN3 dropped 0.7% to $2,981.50, nickel CMNI3 fell 1.2% to $19,320 and tin CMSN3 was down 1.3% at $33,465.

Lead CMPB3 bucked the trend, rising 0.9% to $2,277.

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

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

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