February 1, 2019 / 7:25 AM / 19 days ago

METALS-LME metals fall as survey shows deep contraction in China manufacturing

 (Adds Shanghai closing prices, updated London prices)
    BEIJING, Feb 1 (Reuters) - Most London base metals prices
dropped on Friday after a closely watched private survey showed
that factory activity in China, the world's top metals consumer,
shrank by the most in almost three years last month.
    The Caixin/Markit Manufacturing Purchasing Managers' Index
(PMI) for January fell to 48.3 - its worst reading since
February 2016 - from 49.7 in December.
    The survey came a day after China's official manufacturing
PMI showed a second straight monthly contraction but was higher
than consensus, lifting industrial metal prices along with
dovish comments from the U.S. Federal Reserve on interest rates.
    
    "Unlike the state statistics, the Caixin Manufacturing PMI
is derived exclusively from a survey of 430 private industrial
companies which is exactly the sector that the government has
been trying support for several months," John Browning, managing
director of brokerage Bands Financial, wrote in a note.
     
    FUNDAMENTALS
    * COPPER: Three-month copper on the London Metal Exchange
 was down 0.5 percent at $6,137.50 a tonne, as of 0704
GMT, having hit a seven-week high in the previous session. The
metal widely used in manufacturing and construction is heading
for a weekly rise of 1.4 percent.
    * SHFE: The March copper contract on the Shanghai Futures
Exchange closed up 0.5 percent at 48,270 yuan
($7,165.97) a tonne amid short-covering before the Lunar New
Year shutdown. The ShFE is now closed until Feb. 11.

    * COPPER: Top copper miner Codelco said it had struck a
contract deal with the union of supervisors at its Gabriela
Mistral mine in northern Chile, averting the threat of a strike.

    * TRADE TALKS: U.S. President Donald Trump said he will meet
with China's Xi Jinping soon to try to seal a comprehensive
trade deal, citing substantial progress in two days of
high-level talks.
    * ZINC: The most-traded ShFE zinc contract surged
2.5 percent to a nine-month high of 22,460 yuan a tonne before
closing on 22,395 yuan. LME zinc, which hit a
seven-month high on Thursday amid tight stocks, was down 0.3
percent.    
    * ALUMINIUM: Aluminum Corp of China Ltd,
 known as Chalco, has stopped production at an
aluminium smelting plant in eastern China's Shandong province,
citing high electricity costs.
    * For the top stories in metals and other news, click       
 or     
           
    MARKETS NEWS    
    *  Asian shares crept back from four-month highs as a dismal
survey on Chinese factory activity dulled optimism about the
prospects for a Sino-U.S. deal on tariffs.
    PRICES    
 BASE METALS PRICES                      0710 GMT
 Three month LME copper                      6145
 Most active ShFE copper                    48250
 Three month LME aluminium                 1906.5
 Most active ShFE aluminium                 13545
 Three month LME zinc                      2712.5
 Most active ShFE zinc                      22395
 Three month LME lead                      2109.5
 Most active ShFE lead                      17375
 Three month LME nickel                     12430
 Most active ShFE nickel                    99400
 Three month LME tin                        20880
 Most active ShFE tin                      148800
                                                 
 BASE METALS ARBITRAGE                           
 LME/SHFE COPPER             LMESHFCUc3    293.86
 LME/SHFE ALUMINIUM          LMESHFALc3  -1347.93
                                         
 LME/SHFE ZINC               LMESHFZNc3    517.67
 LME/SHFE LEAD               LMESHFPBc3    378.77
 LME/SHFE NICKEL             LMESHFNIc3   2983.01
                                         
    ($1 = 6.7360 Chinese yuan)

 (Reporting by Muyu Xu and Tom Daly; Editing by Richard Pullin
and Sherry Jacob-Phillips)
  
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