China lending data helps copper to a positive end to a poor week

LONDON: Copper prices rose on Friday after better than expected lending data in China, the world's biggest consumer, bolstered the demand outlook.

Benchmark copper on the London Metal Exchange (LME) closed 0.8 percent up at $6,188 a tonne.

It was still down about 0.4 percent this week, its first weekly decline since early January, as slowing global growth, the US-China trade dispute and a strong dollar took their toll.

Friday's gain followed news that China's banks made the most new loans on record in January after government efforts to jump-start investment and prevent a sharp slowdown.

That offset less positive data showing China's factory-gate inflation slowed for a seventh straight month in January.

"There's a tentative improvement in expectations around Chinese demand," said ICBC Standard analyst Marcus Garvey.

Given that supply of copper is tight, better demand from China should raise prices to about $6,500 if consumption elsewhere does not collapse, he said.

TRADE WAR: Talks between China and the United States made important progress, President Xi Jinping told top US trade negotiators on Friday, adding that meetings would continue in Washington next week.

However, several sources told Reuters there was stalemate on key sticking points. White House adviser Larry Kudlow, meanwhile, said there had been no decision to extend a March 1 US deadline for a deal.

Fears that tariffs would curtail metals demand have pushed prices sharply lower since mid-2018.

US FACTORIES: US manufacturing output fell by the most in eight months in January.

LME STOCKS: On-warrant stocks of copper available to the market in LME-registered warehouses fell to 74,600 tonnes, nearing 13-year lows reached in October.

WARRANTS: Adding to concerns of a supply squeeze, one entity held 50-79 percent of LME copper warrants.

SPREAD: The discount of cash copper to the three-month contract has flipped to a premium, suggesting less nearby supply is available.

SHFE STOCKS: Copper stocks in Shanghai Futures Exchange warehouses have doubled to more than 200,000 tonnes in the past month, with inventories of aluminium and zinc also higher.

ICBC Standard's Garvey said this was a normal seasonal inventory build and did not reflect a change in underlying demand.

OUTLOOK: A dearth of copper mine projects means the market will remain in deficit until 2027 and prices could rise to $10,000 a tonne by 2025, Capital Economics said in a note.

OTHER METALS: LME aluminium ended 0.5 percent up at $1,859 a tonne, zinc rose 2.4 percent to $2,653, nickel gained 1.6 percent to $12,400, lead finished 2 percent higher at $2,078 and tin closed 1.4 percent up at $21,200.