November 20, 2019 / 11:38 AM / 25 days ago

METALS-Copper touches one-week high as China cuts rates

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

* Primary aluminium production rises in October (Updates with closing prices)

By Pratima Desai

LONDON, Nov 20 (Reuters) - Copper prices touched one-week highs on Wednesday after top consumer China cut interest rates to shore up growth, and on hopes the country’s trade dispute with the United States could move towards a resolution.

Benchmark copper on the London Metal Exchange ended unchanged at $5,875 a tonne. Prices of the metal used widely in power and construction earlier touched $5,905.50, the highest level since Nov. 12.

“Movements are to do with macroeconomic expectations, which are largely influenced by the China-U.S trade dispute. The longer it drags on, the harder it is for people to make investment decisions,” said Bernstein analyst Paul Gait.

“China is trying to balance stimulus against not creating an asset bubble, which is the route it went down 10 years ago.”

CHINA RATE CUT: China lowered its lending benchmark rate on Wednesday, as widely expected, to shore up an economy hurt by slowing demand and U.S. trade tariffs.

The cut was the second to a key Chinese rate this week and came a day after central bank governor Yi Gang said Beijing would step up credit support and lower real lending rates, as pressure on the world’s second-largest economy increases.

TRADE: A “phase one” trade deal between the United States and China was supposed to be a limited agreement that would allow leaders from both countries to claim an easy victory while soothing financial markets.

U.S. President Donald Trump issued a fresh threat against China on Tuesday, saying Washington would raise tariffs on Chinese imports if no deal was reached with Beijing to end the spat.

PROCESSING: Two leading Chinese copper smelters, Jiangxi Copper Co and Daye Nonferrous Metals Group, need charges for processing copper concentrate into metal to be higher than the current spot rate to avoid losing money.

CHARGES: Freeport McMoRan Inc expects treatment and refining charges for copper concentrates in 2020 to be well below last year’s levels as Chinese smelting capacity is expected to rise.

INDONESIA: Indonesian President Joko Widodo said on Wednesday the government’s policy of processing natural resources at home would end the country’s current account deficit problem within three years.

ALUMINIUM: Global primary aluminium output rose to 5.392 million tonnes in October from a revised 5.222 million tonnes in September, data from the International Aluminium Institute (IAI) showed on Wednesday.

PRICES: Aluminium was up 0.6% at $1,741; zinc was down 1.3% at $2,313; lead fell 0.3% to $1,987; tin rose 0.3% to $16,030; and nickel slid 2.2% to $14,360 a tonne. (Reporting by Pratima Desai; Editing by Pravin Char and Elaine Hardcastle)

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