October 10, 2019 / 4:36 AM / 5 days ago

METALS-Copper advances despite mixed U.S.-China trade expectations

(Updates prices)

By Mai Nguyen

SINGAPORE, Oct 10 (Reuters) - Copper prices rose on Thursday following reports that the United States is weighing a currency pact with China and could suspend a tariff hike planned next week.

Traders and brokers said despite doubts about the outcome of U.S.-China trade talks set to begin on Thursday, the metals market was taking note of a Bloomberg report saying the White House plans to roll out a formerly agreed currency pact with China and to hold further talks.

Three-month copper on the London Metal Exchange (LME) rose as much as 1.1% to $5,749 a tonne, after falling 0.3% amid reports suggesting a less optimistic outcome from the trade talks.

Copper prices on the Shanghai Futures Exchange (ShFE) ended up 0.1% to 46,700 yuan ($6,566.46) a tonne after spending much of Asian trading in negative territory.

Reuters reported China had lowered expectations for this week's trade talks after the United States blacklisted Chinese companies.

The South China Morning Post newspaper also reported that two sides had made no progress in deputy-level trade talks held on Monday and Tuesday.

"It's quite messy as we see news from both sides. People may see the direction of currency a signal of potentially positive outcome, and copper, a key indicator for an optimistic macro, also gained some attention," said a Singapore-based trader.

FUNDAMENTALS

* LONDON PRICES: LME nickel rose 1.8% by 0714 GMT, zinc advanced 2.3%, lead increased 0.7%, tin edged up 0.1% and aluminium was up 0.2%.

* SHANGHAI PRICES: Shanghai aluminium declined 0.4% after touching a two-month low, lead fell 0.5%, zinc rose 0.9% and nickel was up 0.5%.

* "We see the yuan has strengthened. Strong yuan benefits imports, which means increasing inflows of cargoes ...(leading to) more domestic supply, so LME (prices) go up and ShFE (prices) go down," said the trader.

* ALUMINIUM: Shanghai aluminium prices have been outperforming LME prices due to a shortage in China as domestic supplies fall, a divergence expected to dominate for some time.

* KCM SMELTER: Zambia's Konkola Copper Mines (KCM) smelter on Wednesday was shut down for annual maintenance two days earlier than planned after a leak, its provisional liquidator Milingo Lungu said.

* CHINA: China's cabinet announced steps on Tuesday to ease growing fiscal strains on local governments, amid a push to cut taxes to support the slowing economy.

* LAS BAMBAS: Operations at Las Bambas, one of Peru's largest copper minefields, are being affected by blocked roads disrupting supplies since Sept. 22 amid anti-mining protests, Chinese miner MMG Ltd said.

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PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 7.1119 Chinese yuan renminbi) (Reporting by Mai Nguyen; editing by Subhranshu Sahu and Jason Neely)

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