METALS-Copper hovers near 5-month low as weak demand outlook dominates

Updates prices

By Pratima Desai

LONDON, Jan 2 (Reuters) - Copper prices hovered near five-month lows on Thursday as expectations of deteriorating demand for the industrial metal were reinforced by weak manufacturing activity around the world, particularly in top consumer China.

Benchmark copper CMCU3 on the London Metal Exchange was up 0.4% at $8,807 a metric ton by 1708 GMT, having touched $8,757 on Tuesday, its lowest price since Aug. 8.

Industrial metals are coming under pressure from uncertainty created by the prospect of U.S. President-elect Donald Trump imposing tariffs on imports, which could start a trade war and hit global economic growth and demand.

"There is a lot of nervousness about what Trump will do when he arrives at the White House," one copper trader said. "Manufacturing activity and demand aren't picking up."

Surveys of purchasing managers showed manufacturing activity slowing in China and South Korea in December while European factory activity declined at a faster rate than in November.

Aluminium CMAL3 touched an intra-day high of $2,574.50 a ton on worries about supplies due to shortages of feedstocks such as alumina used to make the metal. It was last down 0.7% at $2,533 a ton.

Concern about supplies has narrowed the discount for the cash contract over three-month aluminium CMAL0-3 to about $23 a ton from above $40 in December.

Aluminium stocks in LME-registered warehouses have dropped MALSTX-TOTAL more than 40% since May last year to 634,650 tons. Stocks of the metal in CME-registered warehouses have also been dwindling AL-TTLTTDY-STX.

Cancelled warrants - metal earmarked for delivery - at 54% of the total suggest more aluminium MALSTX-TOTAL is due to leave LME warehouses over coming days.

On the technical front, upside resistance for aluminium is around $2,575 a ton, the 21-day moving average, with support at the 100-day moving average of $2,553.

Weighing on industrial metals overall was the strong dollar .DXY, which when it rises makes dollar-priced metals more expensive for buyers holding other currencies.

Zinc CMZN3 lost 1.5% to a six-week low of $2,932 a ton, lead CMPB3 was down 0.8% at $1,937, tin CMSN3 fell 1.9% to $28,525 and nickel CMNI3 retreated 1.5% to $15,100.

(Reporting by Pratima Desai
Editing by David Goodman, Rod Nickel and Susan Fenton)

((pratima.desai@thomsonreuters.com))

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