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METALS-Copper dips as Chinese physical buyers shun high-priced metal

(Updates prices)

HANOI, April 22 (Reuters) - Copper prices in London fell on Thursday on subdued demand from physical buyers reluctant to purchase the metal after a 21% rally so far this year, although a softer dollar lent some support.

Three-month copper on the London Metal Exchange was down 0.2% at $9,426 a tonne by 0701 GMT.

The most-traded June copper contract on the Shanghai Futures Exchange closed up 0.3% on 69,150 yuan ($10,664) a tonne, tracking overnight gains in London.

Copper prices have more than doubled since March last year to near a decade high on strong macro and fundamental factors, diminishing appetite from some end users, especially as an economic recovery in top consumer China slowed.

“Downstream acceptability of current copper prices is still low. As a result, trading has become relatively stalemate,” said Huatai Futures in a note, but it added that there is still some demand prior to the Labour Day holiday in early May.

The Yangshan copper premium SMM-CUYP-CN fell to $48 a tonne, its lowest since Nov. 18, while ShFE copper inventories CU-STX-SGH were last at 202,464 tonnes, an 11-month high.

But many investors are still bullish on copper as the dollar weakened, making greenback-priced metals cheaper for holders of other currencies, and as the copper demand outlook from the green energy sector remained bright.

FUNDAMENTALS

* LME nickel fell as much as 1.2% to $16,000 a tonne and zinc was down 0.2% at $2,819 a tonne, while ShFE aluminium ended up 0.5% on 18,095 yuan a tonne, not far off an 11-year high of 18,460 yuan struck last week.

* Antofagasta’s copper production in January-March fell 5.7% year-on-year to 183,000 tonnes due to a surge of COVID-19 infections in Chile.

* A jump in copper scrap supply this year on decade-high prices is unlikely to meet robust demand, leaving shortages that could trigger stock draws and further price gains.

$1 = 6.4843 Chinese yuan renminbi Reporting by Mai Nguyen; additional reporting by Tom Daly; Editing by Subhranshu Sahu, Uttaresh.V and Jan Harvey

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