Copper hits two-week high; gains capped by demand doubts

LONDON: Copper prices touched two-week highs on Monday as better than expected industrial output and investment data from top consumer China boosted sentiment, though gains were capped by the protracted US-China trade dispute.

Benchmark copper on the London Metal Exchange (LME) traded up 1% at $5,995 a tonne in official rings. The metal used widely in power and construction earlier reached $6,017, its highest since July 1.

"Copper's fortunes are very much tied to what is going on with the US-China trade talks and the outlook for Chinese demand and stimulus," said Citi analyst Oliver Nugent.

"There are some bullish backstories on the micro side, like shortages of concentrate, but on the refined metal side there is nothing substantial enough to displace the macro story."

DATA: China's June industrial output rose 6.3% from a year earlier. That beat May's 5% growth - a 17-year low - and the 5.2% expected by analysts polled by Reuters.

Fixed-asset investments for the first half of the year rose 5.8% from a year earlier, ahead of a consensus forecast of 5.5%.

STIMULUS: The numbers suggest an improving outlook, but some analysts say they may not be sustainable and expect Chinese policymakers to provide more economic stimulus in coming months.

CONVICTION: "China's economic data in June was better than expected, but industrial metal markets seemingly were not convinced that this marks a turning point," Julius Baer analysts said in a note.

"Chinese metals demand is sufficiently solid to support prices but not strong enough to push them higher."

China acounts for nearly half of global copper consumption estimated at about 24 million tonnes this year.

TRADE: White House adviser Peter Navarro on Friday told CNBC that the United States trade talks with are in a "quiet period" and that negotiations will start soon.

FUNDS: Negative sentiment is higlighted by data from the US Commodity Futures Trading Commission showing speculators raised net short copper positions on COMEX.

NICKEL: Prices of the stainless steel ingredient touched $13,615, their highest since March 7, on worries about supply after major producer Indonesia said it would stick to plans to reimpose an ore export ban from 2022.

Further price support comes from falling stocks in LME-registered warehouses. At 150,324 tonnes, stocks have halved since May last year.

Three-month nickel was down 0.3% at $13,425 a tonne.

PRICES: Aluminium was up 0.4% at $1,830, zinc gained 0.2% to $2,443.5, lead rose 0.2% to $1,979 and tin slipped 0.8% to $18,050.