Copper steady near 7-month highs in thin trade

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LONDON — Copper prices on Monday held near last week’s seven-month high as U.S.-China trade deal and improved economic data lifted some clouds from the demand outlook.

Trading activity was muted ahead of Christmas holidays, with the London Metal Exchange (LME) closed on Dec. 25 and 26.

Benchmark LME copper traded down 0.1% at $6,170.50 a tonne in official rings but up more than 5% this month in its biggest monthly gain since February.

Prices remain far below 2018 highs, before trade disputes battered the global economy.

A lack of economic news this week meant prices were likely to tread water, Chinese brokerage Citic Futures said in a note.

It said demand for copper pipe in China — the top metals consumer — had slightly increased and copper bar companies had raised their production rates, although these remained lower than a year ago.

CHINA: Industrial output in China is expected to grow by around 5.6% in 2019, the Ministry of Industry and Information Technology said on Monday. The forecast followed better-than-expected November factory data.

CHINA SCRAP: China’s imports of scrap metal in November rose by 6.3% from the previous month to 170,000 tonnes, data showed. The environment ministry issued quotas for 2020 on Monday.

U.S. ECONOMY: U.S. growth rose in the third quarter and the economy probably maintained its expansion as the year ended, according to figures released on Friday.

TRADE/TARIFFS: China will lower tariffs on some products next year as Beijing looks to boost imports and economic growth.

U.S. President Donald Trump said on Saturday the United States and China would “very shortly” sign a ‘phase one’ trade pact. The deal was agreed earlier this month, lifting metals prices, but its full details have yet to be released.

ALUMINIUM STOCKS: On-warrant aluminum inventories in LME-registered warehouses fell to 1.2 million tonnes after 107,125 tonnes of cancellations.

LME stockpiles remain high compared to recent norms, but stocks in Shanghai Futures Exchange warehouses have slumped to 193,820 tonnes, the lowest in nearly three years.

ALI SPREAD: The discount for cash aluminum versus three-month metal on the LME widened to $25.25, the most since September, pointing to more plentiful nearby supply.

PRICE: Benchmark aluminum did not trade but was bid 0.2% lower at $1,797 after touching a six-week high.

INDEX REBALANCING: Commodities tracking funds The Bloomberg Commodity Index (BCOM) and the S&P GSCI Index (GSCI) are likely to buy zinc and aluminum and sell nickel during their annual rebalancing in early January, Citi analysts said.

OTHER METALS: LME zinc traded down 1.5% at $2,305.50 a tonne, nickel traded 0.5% lower at $14,455, lead was bid down 1.1% at $1,916 and tin traded 0.1% lower at $17,325.

(Reporting by Peter Hobson in LONDON and Tom Daly in BEIJING; editing by Jason Neely)

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