METALS-Chinese demand concerns and trade tensions weigh on copper

By Ashitha Shivaprasad

June 11 (Reuters) - Copper prices fell on Wednesday as a weakening demand outlook in China dominated sentiment while the country's trade talks with the United States did little to ease concern over their tariff disputes.

Three-month copper CMCU3 on the London Metal Exchange (LME) was down 1.1% at $9,655 a metric ton by 1603 GMT.

U.S. and Chinese officials have failed so far to reassure markets that they are close to a durable resolution to their trade impasse.

"Downside risks to our copper outlook include the trade war dragging on and reduced policy stimulus from China," said ING commodities analyst Ewa Manthey.

"With uncertainty still high, volatility is likely to remain elevated across metals markets."

China's appetite for importing copper can be seen in the Yangshan copper premium SMM-CUYP-CN at $38 a ton on Wednesday, down from $103 a ton in early May.

China's May copper imports fell 2.5% from April to 427,000 tons, data showed.

Prices drew some support from LME copper stocks MCUSTX-TOTAL that have dropped by 50% in three months to 119,450 tons. Cancelled warrants, referring to metal earmarked for delivery, show a further 70,700 tons are due to leave the LME system.

Draws from the LME system are mostly a result of metal being shipped to the United States, where prices on COMEX HGc1 are higher because the U.S. is considering imposing tariffs on copper imports, traders said.

An increase in U.S. aluminium import tariffs last week to 50% from 25% has led to speculation that levies on copper have become more likely.

Morgan Stanley said that any announcement of U.S. copper tariffs would weigh on LME prices because "excess buying" from the U.S. could cease while Chinese market signals suggest slower demand growth in the second half of the year and higher exports.

Among other metals, aluminium CMAL3 added 0.8% to $2,513 a ton, zinc CMZN3 was little changed at $2,656, nickel CMNI3 was down 0.9% at $15,180 while tin CMSN3 was flat at $32,711 and lead CMPB3 gained 0.3% to $1,988.

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