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METALS-Copper heads for largest quarterly fall since 2015

Zandi Shabalala

* GRAPHIC-2019 asset returns:

* Market looks ahead to G20 meeting

* Premium for cash zinc over three-month contract narrows (Updates with official prices)

LONDON, June 28 (Reuters) - Copper prices were steady on Friday ahead of a meeting of G20 leaders but were on course for their worst quarterly performance since 2015 due to the protracted U.S.-China trade dispute which has undermined growth and demand.

Benchmark copper on the London Metal Exchange was down 0.1% at $5,981 a tonne in the official rings. Prices of the metal used widely in the power and construction industries are down 7.5% so far this quarter.

"It's all very tricky at the moment with the trade war, but Chinese stimulus should help demand for base metals in the second half," said Liberum analyst Ben Davis.

G20: U.S. President Donald Trump and Chinese President Xi Jinping are due to meet on Saturday at the G20 in the Japanese city of Osaka. Negotiations between the world's two largest economies have been fraught.

"The trade war is the single biggest factor. No one has any idea when it's going to end and how," said Guy Wolf of Marex Spectron, adding that uncertainty was holding back economic activity and investment.

DOLLAR: Support for base metals comes from a lower U.S. currency, which makes dollar-denominated commodities cheaper for importers in other currencies.

This is a relationship used by funds to generate buy and sell signals from numerical models.

STIMULUS: Earlier this month China said it will allow local governments to use proceeds from special bonds as capital for major investment projects, in a bid to support the slowing economy.

SCRAP: Chinese copper buyers are hunting for alternative sources of the metal as beefed up restrictions on imports of high-grade copper scrap kick in on Monday in the world's top consumer.

GLENCORE: The copper market is waiting to see the fallout, if any, for output after the death of artisanal miners at a mine owned by Glencore in the Democratic Republic of Congo.

SUPPLY: Worries about supply eased after a two-week strike at Chile's Chuquicamata copper mine ended after three unions voted to accept the latest contract offer from Codelco, the world's largest copper producer.

ZINC: The premium for cash zinc over the three-month contract <CMZN0-3> narrowed to $78 a tonne on Thursday, the lowest since April 9.

Concerns about nearby supply on the LME market sent the premium to $161 a tonne in May, the highest since September 1997.

"Rising supply of zinc concentrate and higher exchange stocks have been improving the metal's availability in the physical market," analysts at ING said.

Zinc stocks in LME-approved warehouses fell below 50,000 tonnes in May to their lowest since the early 1990s. They now stand at 97,000 tonnes. <MZN-STOCKS>

PRICES: Aluminium rose 0.2% to $1,793.50, zinc rose 0.8% to $2,499, lead was bid down 0.8% to $1,925, tin was bid down 0.3% to $18,800 and nickel was steady at $12,705 a tonne.

(Editing by David Evans)