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LONDON: Copper prices held on to recent gains on Wednesday, helped by signs of strong demand in top consumer China and a steep decline in inventories available in the London Metal Exchange (LME) warehouse system.

Benchmark copper on the LME was down 0.1% at $9,369 a tonne at 1611 GMT but above last week’s low of $8,740.

Copper is used in power and construction and many analysts foresee strong demand as fossil fuels give way to electrification. Prices hit a record high of $10,747.50 in May.

“I cannot see a real reason to be bearish ... there is room to break the record,” said Gianclaudio Torlizzi at consultants T-Commodity.

High inflation expectations, falling inventories, higher Chinese import premiums and a positive demand outlook are all supporting prices, he said.

Copper has also held above its 200-day moving average at $8,880, improving its technical picture, he added.

PREMIUMS: Chinese Yangshan copper import premiums have risen above $100 a tonne from as low as $21 in June, suggesting stronger demand for overseas metal.

STOCKS: On-warrant copper inventories in LME-registered warehouses fell to 178,125 tonnes from almost 240,000 tonnes a week ago.

SPREAD: Cash copper on the LME has flipped to a premium against the three-month contract from a roughly $30 discount in mid-August.

A premium indicates tighter supply of quickly deliverable metal.

INFRASTRUCTURE: The US House of Representatives voted to advance key parts of President Joe Biden’s agenda including an infrastructure plan.

GERMANY: German business morale fell for the second month running in August.

GROWTH: The Delta variant of COVID-19 is likely to have only a limited impact on the euro zone economy, European Central Bank Chief Economist Philip Lane said.

CHILE STRIKES: The workers’ union at BHP’s Cerro Colorado copper mine in Chile called on its members to reject a final contract offer, paving the way for a strike.

On Tuesday, Codelco, the world’s largest copper producer, said it reached agreement on a new contract with supervisors at its Andina mine in Chile.

OTHER METALS: LME aluminium was up 0.1% at $2,617.50 a tonne, zinc was 0.1% higher at $3,020, nickel rose 0.7% to $19,200, lead gained 0.9% to $2,315 and tin was up 0.5% at $32,995.

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