METALS-Strong Chinese trade data pushes copper to 8-month high

Peter Hobson

(Updates prices) LONDON, Jan 14 (Reuters) - Copper prices reached their highest in eight months on Tuesday as better-then-expected trade data in China, the largest metals consumer, pointed to a modest recovery in demand and the yuan strengthened.

Benchmark copper on the London Metal Exchange (LME)

touched $6,314.50 a tonne - the most since May 1 - before slipping to $6,294 by 1436 GMT, up 0.1%. It has risen 1.6% this week. Macroeconomic factors including the stronger yuan, solid Chinese trade figures and the signing of a U.S.-China Phase 1 trade deal this week were boosting prices, said Deutsche Bank analyst Nick Snowdon. But a soft physical market heading into Lunar New Year celebrations later this month "should limit the near term upside", he added. The market should tighten again in the second quarter as demand picks up, said Snowdon, boosting prices to around $6,500.

CHINA TRADE: China's exports rose for the first time in five months in December and by more than expected, signalling some recovery in demand. Unwrought copper imports rose 9.1% in December from the previous month to their highest since March 2016. DEMAND: "We expect a mild recovery in domestic (China copper) demand from a low base of 2019," said Yu Xiaojiang, an analyst at Anglo American. "Housing completions and infrastructure investment could climb up and stimulate consumption of copper wires and rods." SUPPLY: Global refined copper production edged higher in December, according to an index based on satellite surveillance of copper plants. TRADE DEAL: The signing of a U.S.-China Phase 1 trade deal on Wednesday will de-escalate but not end a dispute that has weakened economic growth and metals prices. As part of the deal, China has pledged to buy almost $80 billion of additional manufactured goods, over $50 billion more in energy supplies about $35 billion more in services from the United States over the next two years, according to a source.

Credit Suisse analysts said the deal would have minimal implications for global metals demand. YUAN: China's currency continued to strengthen against the dollar after the U.S. Treasury Department reversed its decision to designate China a currency manipulator. A stronger yuan makes metals prices in the greenback cheaper for Chinese buyers.

U.S. ECONOMY: U.S. consumer prices rose slightly less than expected in December and monthly underlying inflation pressures retreated, which could allow the Federal Reserve to keep interest rates unchanged through this year.

NICKEL: LME nickel was down 1.6% at $13,875 a tonne

as headline inventories in LME-registered warehouses rose to 177,600 tonnes, the highest since April, and the discount for cash metal against the three-month contract, at $86.50, suggested ample nearby supply. <MNISTX-TOTAL> MNI0-3> The stainless steel ingredient has fallen nearly 40% from a high in September.

OTHER METALS: Benchmark aluminium was up 0.1% at$1,799, zinc fell 1% to $2,353.50, lead rose0.6% to $1,927 and tin gained 0.2% to $17,405.

(Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Pravin Char, Louise Heavens and Nick Macfie)