METALS-Copper hits two-month high on supply worries, declining LME stocks

By Eric Onstad

LONDON, June 5 (Reuters) - Copper hit its strongest in two months on Thursday, boosted by speculators after prices broke through technical levels as inventories dwindled in London Metal Exchange warehouses and after a big mine in Congo was suspended.

Three-month copper on the London Metal Exchange CMCU3 gained 1.1% to $9,727 per metric ton by 1600 GMT after touching $9,809.50, its strongest since March 31.

Copper got added momentum from speculators after it broke above technical levels on the upside, spurring some automatic buy orders, traders said.

"Overall it's quite a good backdrop for copper at this point. You've still got this build up of Comex stocks coming through, so there's a squeeze on the LME effectively," said Dan Smith, managing director at Commodity Market Analytics.

U.S. President Donald Trump's move to double tariffs on aluminium and steel to 50% has renewed focus on an ongoing U.S. investigation into potential new copper import duties.

That has accelerated a flow of copper to the United States, including from LME inventories, as traders seek to profit from higher prices there in anticipation of U.S. tariffs being imposed on the metal.

U.S. Comex copper futures HGc2 climbed 1.1% to $4.94 a lb, bringing the premium over LME copper to $1,159 a ton.

LME copper stocks fell to 138,000 tons, the weakest in nearly a year and down by nearly half so far this year MCUSTX-TOTAL, while Comex inventories have shot up by 90% over the past two months HG-STX-COMEX.

LME data on Thursday also showed that copper stocks were due to continue to drop as holders of 11,625 tons of inventories notified the exchange of pending removals.

Copper is also being supported by concern about the recent suspension of the Kakula copper mine in the Democratic Republic of Congo, Smith added.

Co-owner Ivanhoe Mines IVN.TO said on Monday it planned to restart a section of the mine later this month.

LME tin CMSN3 gained 1.6% to $32,530 a ton, the second session of hitting a one-week high on concerns that the resumption of supply from Myanmar's tin-rich Wa State would take longer than previously expected.

Among other metals, LME aluminium CMAL3 slipped 0.3% to $2,475.50 a ton, zinc CMZN3 shed 0.7% to $2,684 and lead CMPB3 eased 0.6% to $1,979 while nickel CMNI3 gained 0.8% to $15,515.

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