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METALS-Copper falls on weak demand outlook, inventory pile up

Mai Nguyen

(Updates prices)

SINGAPORE, July 4 (Reuters) - Copper prices fell on Thursday after a jump in London Metal Exchange inventories, but optimism around planned U.S.-China trade talk next week capped losses.

Three-month copper on the London Metal Exchange (LME) eased 0.2% to $5,905 a tonne by 0708 GMT, while the most-traded copper contract on the Shanghai Futures Exchange ended flat at 46,350 yuan ($6,744.76) a tonne.

LME copper stockpiles <MCUSTX-TOTAL> on Tuesday jumped 14% in one day to a one-year high at 272,500 tonnes, data released on Wednesday showed, pressuring copper prices, while demand outlook for copper has not picked up.

China's air conditioning output in July might fall more than the level seen in the same month of previous years, indicating weaker demand for copper, while major consumers of the red metal, including the construction and power sectors, are expected to post stable growth, said CRU's copper analyst He Tianyu.

However, the discount between LME cash and three-month contracts <CMCU0-3> eased to a two-month low at $9.25 a tonne, suggesting that the copper market is getting tighter.

Meanwhile, top U.S. and Chinese representatives are arranging to talk again next week, U.S. administration officials said on Wednesday, in a move to try to resolve a year-long trade war that has been hurting global growth and metals demand.

FUNDAMENTALS

* PRICES: London aluminum advanced 0.1%, nickel fell 0.2%, lead rose 0.6% and tin decreased 0.5%. In Shanghai, aluminum traded 0.9% higher while tin rallied 1.9%.

* U.S. ECONOMY: U.S. trade deficit jumped in May and the prolonged Sino-U.S. trade tensions helped drive activity in the services sector to a two-year low in June, further signs that economic growth slowed sharply in the second quarter.

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PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminum

Most active ShFE aluminum

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 = 6.8720 Chinese yuan renminbi)

(Reporting by Mai Nguyen; editing by Gopakumar Warrier and Rashmi Aich)