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By Zandi Shabalala
LONDON, April 30 (Reuters) – Copper eased on Thursday as a private sector survey showed factory activity in top consumer China unexpectedly shrank, but hopes for higher metals demand as the world’s second largest economy reboots curbed price falls.
Lingering fears for a long recovery ahead for China pulled benchmark copper on the London Metal Exchange (LME) down 1.3% to $5,196 per tonne by 1611 GMT.
Prices touched their highest in over six weeks in early trade, helped by a reading of China’s official factory activity showing faster expansion in April.
However, that was offset by the closely watched Caixin survey which showed factory activity shrank last month as the coronavirus pandemic shattered global demand, sparking a substantial drop in export orders and more layoffs.
China accounts for nearly half of global copper consumption estimated at 24 million tonnes.
ING analyst Wenyu Yao said China’s recovery, although slow, had fuelled the recent rally in copper prices and that supply cuts were also underpinning the market.
OUTPUT CUTS: Supporting prices were expectations for lower output as miner Glencore cut its production forecast for the year for copper by 3% to 1.25 million tonnes and for zinc by 8% to 1.16 million tonnes.
Mining giants including Anglo American and Rio Tinto have also cut their 2020 output expectations as government restrictions hobble operations.
CHILE COPPER: Chile, the world´s top copper producer, boosted its output of the red metal in March versus the prior year, even as the coronavirus outbreak spread quickly across the country.
CHINA MOLY: China Moly is sending more copper and cobalt from Democratic Republic of Congo (DRC) to ports in Tanzania, Namibia and Mozambique, as it weathers coronavirus disruption at South African outlets.
COPPER PREMIUMS: In further signs of higher demand in China, copper premiums in bonded warehouses of Yangshan SMM-CUYP-CN rose to $90 a tonne on Wednesday, their highest since November 2018, the latest Shanghai Metals Market (SMM) data showed.
BONDED STOCKS: Copper inventories continued to fall in China, with stocks in bonded warehouses of Shanghai SMM-CUR-BON down to 305,800 tonnes as of April 24, the lowest since Feb. 7, SMM data showed.
Meanwhile, ShFE copper stocks CU-STX-SGH declined for a sixth straight week, down 36.6% to 230,956 tonnes.
ALUMINIUM: Fresh cancellations of 10,000 tonnes took on-warrant aluminium stocks available to the market in LME warehouses to 1.18 million tonnes.
But the LME inventories are still near their highest since December, having climbed about 78% since Jan. 17. MCUSTX-TOTAL
OTHER PRICES: LME aluminium eased 1.1% to $1,489.50 a tonne, zinc fell 0.6% to $1,933.50, lead shed 1.2% to $1,631, tin lost 1.1% to $15,135, and nickel shed 0.9% to $12,205.
Reporting by Zandi Shabalala; Additional reporting by Mai Nguyen; Editing by Mark Potter and Emelia Sithole-Matarise
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