March 28, 2019 / 11:33 AM / in 2 months

METALS-Copper rises as U.S.-China trade talks begin in Beijing

(Updates with closing prices)

By Peter Hobson

LONDON, March 28 (Reuters) - Copper prices rose on Thursday as the threat of disruption at a mine in Peru underlined fears that the market is undersupplied, while investors waited for news from U.S.-China trade talks starting in Beijing.

Benchmark copper on the London Metal Exchange (LME) did not trade but was bid 0.4 percent higher at $6,360 a tonne at the close, edging up towards last week’s 8-1/2 month high of $6,555.50.

Protests at Las Bambas in Peru showed no sign of abating, days after the mine’s operator, China’s MMG, warned it could declare force majeure on contracts.

Stockpiles of copper in LME-registered warehouses, meanwhile, at 169,950 tonnes slipped back towards 11-year lows below 120,000 tonnes reached earlier this month. MCUSTX-TOTAL

However, in China, the world’s largest consumer of industrial metals, stockpiles in Shanghai Futures Exchange warehouses were sharply higher at 269,172 tonnes following a seasonal lull in demand. CU-STX-SGH

A Reuters poll showed factory activity likely contracted for a fourth straight month in March, suggesting weaker Chinese demand for raw materials.

“The LME looks tight but the Chinese market is looking pretty well supplied for the moment,” said ING analyst Warren Patterson.

Any resolution of the U.S.-China trade talks could push prices higher, he added. Metals prices fell sharply last year when the dispute began.

TRADE TALKS: China has made proposals in talks with the United States on a range of issues that go further than it has before, including on forced technology transfer, as the two sides work to overcome obstacles to a trade deal.

U.S. GROWTH: The U.S. economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the Trump administration’s 3 percent annual target.

CHINA SCRAP: China aims to cut solid waste imports to zero by next year.

COPPER WARRANTS/SPREAD: One entity held more than 90 percent of copper warrants on the LME. But a $5.50 premium for cash copper over the three-month contact suggested traders were having little difficulty accessing metal. <0#LME-WHL> CMCU0-3

COPPER TC/RCs: China’s top copper smelters lowered their floor treatment and refining charges for the second quarter of 2019 by more than 20 percent, sources said, indicating a tighter copper concentrate market.

CHINA IMPORT PREMIUMS: Chinese copper import premiums fell to $55.50, nearing a two-year low of $52.50 reached earlier in March. SMM-CUYP-CN

DEFICIT: The 24 million tonne a year copper market saw a deficit of 387,000 tonnes last year, the International Copper Study Group (ICSG) said. Analysts expect another shortfall this year.

OTHER METALS: LME aluminium finished down 0.4 percent at $1,903 a tonne, zinc fell 0.7 percent to$2,867, lead ended up 0.6 percent at $2,019 and tin closed 0.3 percent higher at $21,420. Nickel did not trade but was bid down 1.4 percent at $12,880.

Reporting by Peter Hobson Additional reporting by Tom Daly Editing by Edmund Blair, David Evans, Kirsten Donovan

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