METALS-Copper heads for weekly gain despite dip on China policy fears

(Updates throughout, changes dateline from HANOI)

LONDON, April 9 (Reuters) - Copper prices edged lower on Friday as strong Chinese inflation data raised fears that the world’s biggest metals consumer will tighten monetary policy, though expected supply tightness kept prices on course for a weekly gain.

Benchmark copper on the London Metal Exchange (LME) was down 0.3% at $8,984 a tonne by 1206 GMT but up about 2% for the week and on course for its first weekly rise in a month.

A barnstorming economic recovery in China and speculative buying pushed the metal used in power and construction to $9,617 in February, its highest in a decade, before prices stagnated.

The gains should resume as countries pump money into copper-intensive infrastructure and electrification, said WisdomTree analyst Nitesh Shah.

“The long-term story is just very positive,” he said. “I really doubt that miners are going to be able to keep up with the pace of demand.”

CHINA: Factory gate prices in China rose in March at their fastest annual pace since July 2018. The data pushed Chinese stock markets lower as investors anticipated tighter monetary policy to contain inflation.

GLOBAL MARKETS: Despite the falls in Chinese markets, global stocks hit record highs and European equities were on course for their longest weekly winning streak since November 2019.

CHINA IMPORTS: Chinese Yangshan import premiums fell to $51.50 a tonne from more than $70 a month ago, suggesting lower demand for overseas metal. SMM-CUYP-CN

China’s refined copper imports this year are expected to fall by about 27% from last year’s bumper levels and primary aluminium inflows will more than halve, researchers Antaike said.

RARE EARTHS: China’s rare earth ore output is expected to rise 11.4% year on year to 156,000 tonnes in 2021, Antaike said.

MONGOLIA: Rio Tinto said it has reached a binding agreement with Turquoise Hill Resources over funding for expansion of the massive Oyu Tolgoi copper-gold mine in Mongolia.

PRICES: LME aluminium was down 0.5% at $2,272 a tonne, zinc fell 0.8% to $2,832, nickel was 1.2% down at $16,620, lead slipped 0.4% to $1,975 and tin rose 0.1% to $25,810.

Reporting by Peter Hobson Additional reporting by Mai Nguyen Editing by David Goodman