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METALS-Copper heads higher as coronavirus constricts Chilean supply

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(Updates with official prices) By Peter Hobson LONDON, June 29 (Reuters) - Supply disruption in top producer Chile, solid demand in top consumer China and dwindling stockpiles kept copper prices near five-month highs on Monday. Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $5,966.50 a tonne in official trading, close to Friday's peak of $6,006.

The metal, used in power and construction, has risen around 35% from a low in March, recouping almost all ground lost during the first stages of the coronavirus outbreak.

However, supply and demand fundamentals suggest a fair price for copper around $5,500, with lower Chilean output offset by weak demand outside China, said independent analyst Robin Bhar.

CHILE: Chile's copper output could decline 200,000 tonnes, or 3.5% of 2019 production, as coronavirus cases rise, its mines minister said. CHINA: Profits at China's industrial firms rose for the first time in six months in May. Chinese factory activity likely grew for the fourth month June but the pace may be waning, a Reuters poll showed. MARKETS/OUTBREAK: World stock markets were around two-week lows as the global death toll from COVID-19 surpassed half a million on Sunday, with 10.1 million reported cases. STOCKS: On-warrant copper inventories in LME-registered warehouses fell by 2,450 tonnes to 112,850 tonnes, the lowest since Jan 17. Stocks in Shanghai Futures Exchange (ShFE) warehouses at 99,971 tonnes are the lowest since January 2019. SPREAD: In a sign of tighter nearby supply, the discount for cash copper versus three-month metal on the LME fell to around $7 from $30 earlier this month. TECHNICALS: LME copper may test Fibonacci and downtrend resistance around $6,075 per tonne, and a break above this could open the way towards $6,343, Reuters technical analyst Wang Tao said. OTHER METALS: LME aluminium was up 0.3% at $1,607 a tonne, zinc fell 0.4% to $2,030.50, nickel rose 0.3% to $12,723, lead gained 0.4% to $1,793.50 and tin was 0.4% lower at $16,751. (Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Mark Potter, Kirsten Donovan)

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