Copper dips but still on track for best month in over a year

LONDON: Copper prices fell on Thursday on concerns over demand from number one consumer China, but held on track for their best month since December 2017 as stocks of the metal in London Metal Exchange warehouses languished near record lows.

Prices lost ground as Chinese factory data and a U.S. warning that it was too early to predict the outcome of trade talks with Beijing raised concerns over the demand outlook.

Benchmark copper on the LME was down 0.2 percent at $6,492 a tonne at 1111 GMT but up 5.2 percent in February, its second consecutive monthly gain.

The metal used in power and construction had plunged to a 1-1/2-year low of $5,725 in early January as the U.S.-China trade dispute threatened to accelerate an economic slowdown in China.

Hopes of a trade deal had helped to pull prices higher, said Capital Economics analyst Ross Strachan.

"But it would appear that we are not quite as close as we might have thought," he said. "Chinese (manufacturing) PMI data was also weak. It's a bit surprising that metals haven't dropped harder."

CHINA FACTORIES: Factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in the economy.

The gloomy findings are likely to reinforce views that the world's second-largest economy is still losing steam, after growth last year cooled to a near 30-year low.

Growth in disposable income also slowed in China last year.

TRADE TALKS: The United States will need to maintain the threat of tariffs on Chinese goods for years even if Washington and Beijing strike a deal to end a costly tariff war, President Donald Trump's chief trade negotiator said.

Robert Lighthizer cautioned that much work was still needed to nail down a U.S.-China trade agreement, including working out how it will be enforced.

COPPER STOCKS: Supply of copper looked tight after on-warrant stocks available to the market in LME-registered warehouses fell to 21,600 tonnes from around 300,000 tonnes a year ago. They are now the lowest since 2005.

COPPER SPREAD: Cash copper has also risen to a premium of $39.50 a tonne over the three-month contract from a discount around $20 a tonne earlier in February.

CHILE: Chile's Chuquicamata underground copper mine is due to start operations in the middle of this year, state copper miner Codelco said on Wednesday.

OTHER METALS: LME aluminium was down 0.5 percent at $1,912 a tonne, zinc was 0.2 percent higher at $2,750.50, lead had gained 1.1 percent to $2,160, tin  rose 0.4 percent to $21,615 and nickel was up 0.5 percent at $13,120.