April 11, 2019 / 4:32 AM / 10 days ago

METALS-Copper falls as supply, growth concerns outweigh trade talks progress

(Updates prices, recasts throughout)

By Mai Nguyen

SINGAPORE, April 11 (Reuters) - London copper fell on Thursday, with rising supply and risks of a global slowdown that could hurt metal demand outweighing progress in trade talks between the United States and China, the world’s top copper user.

Economic policymakers continue to express concern about the future of the global economy. The U.S. Federal Reserve said in the minutes from their March meeting, released on Wednesday, that their worries are leading the central bank to consider leaving interest rates unchanged this year.

“There’s some positive developments in China, but then lots of things are still uncertain especially Brexit and this new development in the trade friction between the U.S. and Europe,” said analyst Helen Lau of Argonaut Securities.

“And of course there’s a downgrade in economic growth,” Lau said, referring to a recent cut in global growth forecast by the International Monetary Fund.

FUNDAMENTALS

* COPPER: Benchmark copper on the London Metal Exchange (LME) fell 0.3 percent to $6,445.50 a tonne by 0717 GMT. The most-traded copper contract on the Shanghai Futures Exchange (ShFE) lost 0.8 percent to 49,270 yuan ($7,337.20) a tonne.

* COPPER INVENTORIES: On-warrant copper stocks in LME-approved warehouse rose to an eight-month high as of Tuesday at 178,375 tonnes, the latest data showed. MCUSTX-TOTAL

“In part, (copper’s) attempts to break higher have been capped by recent LME inventory inflows, which have also resulted in a softening of the forward curve,” ICBC Standard Bank said in a report released on Wednesday.

The price spread between the cash copper price and the three-month forward has shifted to a discount of $15.50 a tonne as of Thursday, indicating the market has moved to a contango structure where prompt prices are less than later-dated prices.

The spread was at a premium of as much $70 a tonne in early March, indicating the market was backwardated. CMCU0-3

Copper stockpiles in warehouses monitored by the Shanghai Futures Exchange were at 257,320 tonnes as of April 4, surging from around 100,000 tonnes at the beginning of this year. CU-STX-SGH

* U.S.-CHINA TRADE: The United States and China made further progress in trade talks and have agreed on a mechanism to enforce any trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Wednesday.

* LAS BAMBAS: Chinese miner MMG Ltd has sent some supplies and personnel to its copper mine Las Bambas after protesters in Peru partially suspended their two-month road blockades, a company source said on Wednesday.

* CODELCO: Chile’s Codelco, the world’s biggest copper producer, is set to shell out $40 billion in 10 years to overhaul its century-old Chuquicamata and El Teniente mines, among others, Chairman Juan Benavides said on Wednesday.

* CHINA PPI: China’s factory-gate inflation picked up for the first time in nine months in March, easing deflation worries and likely adding to optimism that China’s economy is picking up.

Markets are also eyeing trade data from China due on Friday.

* PRICES: Other London metals moved mixed, with aluminium edging up 0.2 percent, nickel easing 0.8 percent and zinc rising 0.2 percent.

* SHANGHAI LEAD: Shanghai lead ended down 2 percent, as on-warrant lead inventories in warehouses tracked by ShFE dropped to a three-month low at 16,532 tonnes on Thursday. WSPB-TOTAL-D

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PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 6.7151 Chinese yuan renminbi)

Reporting by Mai Nguyen; Editing by Christian Schmollinger and Shreejay Sinha

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