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London copper rebounds on tight supply

London copper prices rebounded from two straight weeks of losses on Monday, supported by tight inventories of refined metal and grim outlook of mined supply.

Three-month copper on the London Metal Exchange CMCU3 rose as much as 1% before easing to fall 0.3% to $9,470 a tonne by 0743 GMT, having lost a combined 7.6% in the previous two weeks.

On-warrant LME copper inventories MCUSTX-TOTAL edged up slightly to 31,745 tonnes, but were still hovering near their lowest since 1998 of 14,150 tonnes hit on Oct. 14, with cash premium over the three-month contract MCU0-3 last at $312.50 a tonne, indicating tight nearby supplies.

The most-traded December copper contract on the Shanghai Futures Exchange SCFcv1 closed down 0.9% to 70,140 yuan ($10,956.81) a tonne.

ShFE copper stocks rose for the first time in three weeks CU-STX-SGH to 49,327 tonnes, but were still down some 80% from May.

“We are bullish on copper over the medium term due to growing global demand and under-appreciated supply constraints,” Jefferies analysts said.

“Global copper supply is only slowly increasing despite the strength in prices this year and despite several projects ramping up in line with expectations. All recent changes to production guidance have been downward revisions,” the brokerage said.

But a metals broker said the market is expected to be volatile as traders adjust their spread positioning on the first day of the month.

China’s October factory activity grew at its fastest pace in four months as new orders rose and disruptive power shortages started to ease, a Caixin/Markit private survey showed.

China is the world’s biggest consumer of copper, which is used widely in manufacturing.

However, the relative strength in the Caixin data contrasts with an official survey released on Sunday that showed China’s factory activity shrank for a second month, hurt by persistently high raw material prices and softer domestic demand.

FUNDAMENTALS

LME aluminium CMAL3 edged down 0.2% to $2,710.50 a tonne, nickel CMNI3 fell 0.7% to $19,315 a tonne, while ShFE zinc SZNcv1 jumped 1.6% to 24,055 yuan a tonne and ShFE tin SSNcv1 surged 4.9% to 274,050 yuan a tonne.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Shounak Dasgupta and Rashmi Aich)

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