(Updates prices, adds scrap)
LONDON, Aug 19 (Reuters) - Copper prices rallied to their highest in over two years on Wednesday, boosted by a weaker dollar, low stocks and falling output.
Benchmark copper on the London Metal Exchange was up 1.8% to $6,683 a tonne at 1630 GMT, after touching its highest since June 2018 at $6,707.
“You have the perfect cocktail of price supporting factors with pick up in demand, supply issues, and expectations for a weaker dollar,” said Saxo Bank analyst Ole Hansen.
China’s refined copper output in July fell 5.3% from the previous month to 814,000 tonnes, according to official data.
Globally, copper smelting activity tumbled to its lowest level in more than two years in July, data from satellite surveillance of copper plants showed.
Meanwhile, the U.S. dollar hovered around a 27-month low on uncertainties about an economic recovery and the U.S. fiscal stimulus package.
A weaker U.S. dollar makes LME metals priced in the greenback cheaper for holders of other currencies.
REDUCED OUTPUT: Rio Tinto cut its refined copper outlook for the year to 135,000-175,000 tonnes from 165,000-205,000 tonnes.
SCRAP: China has granted import quotas for another 14,530 tonnes of copper scrap and 2,610 tonnes of aluminium scrap for 2020, an official notice said on Tuesday.
INVENTORIES: Total copper stocks in warehouses monitored by the LME were at their lowest since 2007, supporting prices MCUSTX-TOTAL.
This is reflected in the $18 a tonne premium of the LME cash contract over the three-month contract and compares to a discount of about $5 last week. CMCU0-3
TRADE: No new high-level U.S.-China trade talks are scheduled but the two sides remain in touch about implementing a Phase 1 deal, White House Chief of Staff Mark Meadows said.
PRICES: LME aluminium advanced 0.9% to $1,790 a tonne, zinc climbed 1.8% to $2,502, lead added 0.9% to $2,005, tin gained 0.4% to $17,675 while nickel rose 0.3% to $14,725. (Reporting by Zandi Shabalala, additional reporting by Mai Nguyen; Editing by Kirsten Donovan and Mark Potter)
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