Off The Wire
METALS-Copper hits eight-month high ahead of Chinese data
* U.S.-China trade deal to be signed this week
* Market awaits Chinese trade, GDP and loans data
* Copper inventories continue to fall (Updates with closing prices) By Peter Hobson LONDON, Jan 13 (Reuters) - Copper prices on Monday hit their highest since May as traders awaited the signing of a U.S.-China Phase 1 trade deal and Chinese data that will show whether a pick-up in economic activity has been maintained.
China is the largest consumer of metals, but the trade dispute with Washington contributed to a slowing of its economy in 2019, pushing down industrial metals prices.
Factory output in China began to contract last year but returned to expansion in November and December. A Reuters poll showed that December export and import growth is expected to have improved. Data including trade, GDP and new loans are also due this week. Benchmark copper on the London Metal Exchange (LME) ended 1.5% up at $6,290 a tonne after touching $6,291, its highest since May 1.
"Copper and the rest of the base metals have come a long way already - partly driven by the trade talks, the Phase 1 deal and the improvement in the Chinese economy," said Danske Bank analyst Jens Pedersen.
However, he said further progress in trade talks would be difficult and China's economy may not improve more than it already has.
"Copper prices will probably level off around these levels," he said.
TRADE WAR: Chinese Vice Premier Liu will visit Washington over Jan. 13-15 to sign a trade agreement. The Phase 1 deal "stops the bleeding" but does not end the trade war, a senior U.S. Chamber of Commerce official said on Monday, warning that significant challenges remain. GLOBAL MARKETS: World stock markets ticked higher and were near record highs. YUAN: China's currency strengthened sharply against the dollar, taking its gains since the start of December to about 2% and making dollar-priced metals cheaper for buyers in China. CHINA AUTOS: The China Association of Automobile Manufacturers (CAAM) expects a 2% fall in vehicle sales in the world's largest car market this year after an 8.2% drop in 2019. UK: Britain's economy in November grew at its weakest annual pace in more than seven years. COPPER STOCKS: Headline copper inventories in LME-registered warehouses fell by 2,725 tonnes to 130,000 tonnes, down 60% from August and the lowest since March. SPREAD: The discount for LME cash copper against the three-month contract, at $24.75, suggested no shortage of nearby metal. POSITIONING: Speculators cut their net short in LME copper to 5.7% of open contracts by Thursday, from 17% at the end of last month, broker Marex Spectron said.
CODELCO: Top copper miner Codelco may not renew an agreement
to supply copper concentrate to China's Shandong Fangyuan for
2020 because of financial problems at the private smelter,
sources said. CHINA SCRAP: New Chinese standards for high-grade copper and
aluminium scrap will come into force from July 1. OTHER METALS: LME aluminium finished down 0.4% at
$1,798 a tonne, zinc gained 0.1% to $2,378, nickel fell 0.7% to $14,090, lead slipped 0.8% to
$1,916 and tin closed with a 0.7% gain at $17,375.
(Reporting by Peter Hobson Additional reporting by Mai Nguyen Editing by David Goodman)
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