July 2, 2020 / 11:55 AM / a month ago

METALS-Copper rallies as supply risk grows in top miner Chile

* GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl

* BHP winds down small Chile copper mine (Updates prices, adds treatment charges)

By Zandi Shabalala

LONDON, July 2 (Reuters) - Copper gained for a sixth straight session on Thursday due to supply disruptions in the world’s largest producer Chile and more signs of recovery in large economies.

Three-month copper on the London Metal Exchange was up 0.3% at $6,077.50 a tonne by 1644 GMT, after touching its highest since Jan. 22.

The metal was on track for its seventh straight week of gains, which would be its longest winning streak in nearly three years.

“Lockdowns are easing in many economies and that should drive up demand,” said WisdomTree analyst Nitesh Shah.

“At the same time, mines in Chile are experiencing problems in terms of COVID-19 cases.”

BHP Group said it would ramp down activity at its Cerro Colorado copper mine in Chile. The mine produced 71,700 tonnes of copper in 2019, accounting for about 1.2% of Chile’s total.

This comes a week after Chile state miner Codelco said it would close its refinery and foundry operations at its Chuquicamata division to arrest the spread of the coronavirus.

GLOBAL ECONOMY: A slump in global manufacturing showed signs of easing in June as a rebound in Chinese and U.S. activity offered some hope the world’s two largest economies may have passed the worst of the devastation caused by the novel coronavirus, while the collapse in European factory activity abated.

POSITIONS: Supporting copper were rising bets for higher prices, with the net long on LME copper extending to around 5.3% of open interest as of Tuesday, according to broker Marex Spectron. These are levels not seen since January.

SUPPLY DEALS: China’s top two copper smelters, Jiangxi Copper and Tongling Nonferrous clinched copper concentrate supply deals with miner Antofagasta for the first half of 2021, sources said.

OTHER PRICES: Aluminium was up 0.2% at $1,623.50 a tonne, zinc was flat at $2,042, lead added 0.5% to $1,780, tin rose 0.6% to $16,850 while nickel gained 0.7% to $12,930. (Reporting by Zandi Shabalala, additional reporting by Mai Nguyen; Editing by Mark Potter and Alexandra Hudson, Kirsten Donovan)

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