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Copper rebounds on supply worries, weaker dollar

Copper prices bounced on Friday on renewed worries about scarce supplies and as the dollar weakened.

Three-month copper on the London Metal Exchange CMCU3 was up 0.9% at $9,915 a tonne by 1000 GMT, after dropping by 3.5% in the previous session.

Metals prices slid on Thursday, partly due to intervention by China to cool surging coal prices.

“Oil and gas prices are not coming down to the same extent as coal. We think that energy prices are high and will stay high for the time being and put pressure on metals producers again,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.

“We expect to see higher metals prices going forward. We think the supply situation will deteriorate further before it gets better.”

While the premium of cash LME copper over the three-month contract CMCU0-3 has eased to $247 a tonne from a peak of over $1,000 on Monday, LME inventories remain very low.

On-warrant LME stocks, those not earmarked for delivery, have tumbled by over 90% since mid-August.

The dollar index .DXY was down 0.2%, making commodities priced in the U.S. currency cheaper for buyers using other currencies.

* In China, prices of energy-intensive aluminium hit their limit down on Friday to their lowest in over a month on tumbling Chinese coal prices. The most-traded November aluminium contract on the Shanghai Futures Exchange SAFcv1 shed as much as 8% to 21,405 yuan ($3,348.40) a tonne, its lowest since Sept. 6.

In London, LME aluminium CMAL3 rose 0.7% to $2,930 a tonne after sliding by 5.2% a day earlier.

* Rising aluminium inventories in China also weighed on prices, with ShFE stocks AL-STX-SGH up for four straight weeks and social stocks in China SMM-ALU-CON at their highest since May 27 of 957,000 tonnes.

* MMG Ltd’s 1208.HK Las Bambas, one of Peru’s largest copper mines, said that it does not have any pending commitments with Andean communities that have blocked the road used by the company to transport the mineral.

* LME zinc CMZN3 rose 1% to $3,462 a tonne, nickel CMNI3 climbed 1.2% to $20,160, lead CMPB3 advanced 0.6% to $2,415 and tin CMSN3 added 1.1% to $37,675.
Source: Reuters (Reporting by Eric Onstad; Additional reporting by Mai Nguyen in Hanoi; Editing by Krishna Chandra Eluri)

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