Copper holds steady as tight supply offsets demand concerns

LONDON: Copper prices held steady on Thursday as worries over the negative impact of trade disputes on demand were offset by potential shortages of supply.

Benchmark copper on the London Metal Exchange (LME) did not trade in official rings, but was bid down 0.1 percent at $5,914.50 a tonne.

US markets were closed on Thursday for Independence Day, so trading volumes were low.

Copper, used in power and construction, has tumbled around 20% from a high in June last year, before US President Donald Trump unleashed a trade stand-off with China that has damaged both countries' economies.

The impact on China is particularly important for prices because China accounts for around half of global copper demand.

"Weak Chinese manufacturing surveys mean prices remain well below recent peaks," analysts at Capital Economics said.

"(But) looking ahead, the price of copper should be supported by limited mine supply growth and, from July 1, further restrictions on scrap imports into China," they said.

TRADE WAR: Top representatives of the United States and China are organising a resumption of talks for next week to try to resolve a year-long trade war between the two countries, Trump administration officials said.

GLOBAL FACTORIES: Data this week showed factory activity shrank in China and across much of Europe and Asia. Activity also slowed to near a three-year low in the United States.

US ECONOMY: The United States added fewer jobs than expected in June and its trade deficit jumped in May, data showed, suggesting that economic growth slowed sharply in the second quarter.

YUAN: China's yuan has strengthened from a six-month low against the US dollar reached last month, making dollar-priced metals cheaper for Chinese buyers and supporting prices.

COPPER STOCKS: Inventories in LME-registered warehouses fell by 975 tonnes to 271,525 tonnes after jumping 14% in one day to a one-year high of 272,500 tonnes. <MCUSTX-TOTAL>

COPPER SPREAD: However, the discount of cash copper to the three month contract on the LME narrowed to $9, the lowest since early May, pointing to tighter supply of nearby metal. <MCU0-3>

ZINC: LME zinc was bid down 0.9% at $2,426 in official rings, close to last month's 5 1/2-month low of $2,412.

ZINC SPREAD: The premium for cash zinc over three month metal on the LME fell to $18, down from more than $150 in May and the lowest since March, suggesting greater availability of nearby metal. <MZN0-3>

OTHER METALS: LME aluminium was bid up 0.2% at $1,794, nickel traded up 0.2% at $12,380, lead was bid 0.4% higher at $1,888 and tin traded up 0.8% at $18,450.