(Updates prices) LONDON, Jan 22 (Reuters) - Copper fell on Friday alongsidestock markets and oil prices as poor economic data and newcoronavirus restrictions in China, the world's biggest rawmaterials consumer, weakened the outlook for economic growth anddemand.
But losses eased after U.S. factory figures showed activitysurging to its highest level in nearly 14 years in earlyJanuary. Benchmark copper on the London Metal Exchange (LME)was down 0.2% at $8,005 a tonne at 1700 GMT, off an earlier lowof $7,864.50. The metal reached an eight-year high of $8,238 onJan. 8.
"We are just hitting the buffers here," said Saxo Bankanalyst Ole Hansen. "Commodities had a phenomenal run, and thatjust screams correction." A coronavirus outbreak in China and the upcoming ChineseLunar New Year holiday may curb industrial activity. This andslow progress suppressing the virus in Europe and the UnitedStates are forcing investors to reassess copper's near-termoutlook, he said.
But many analysts, including Hansen, say supply will tightenas the year progresses, pushing prices higher. OUTBREAK: China reported 103 COVID-19 cases on Friday, withBeijing launching mass testing in some areas and Shanghaitesting all hospital staff. ECONOMY: Economic activity in the euro zone shrank markedlyin January, PMI surveys showed. MANUFACTURING: Japan's factory activity slipped intocontraction in January. MARKETS: Oil prices and Chinese, European and U.S. equitiesfell. The U.S. dollar steadied after three days of losses. POSITIONING: Speculators are reducing bets on higher copperprices from multi-year peaks. COPPER STOCKS: However, copper stocks in warehousesmonitored by the LME, Comex and the Shanghai Futures Exchangeare dwindling, with ShFE inventories the lowest since 2011. TIN: Benchmark tin was roughly unchanged at $21,995a tonne after tightness in the LME system pushed prices to$22,395, the highest since 2014, on Thursday.
STOCKS: Stocks in LME-registered warehouses have plunged to1,030 tonnes, near record lows, with almost 40% alreadyearmarked for delivery. SPREAD: The premium for cash tin over the three-monthcontract surged to a record high of around $553 a tonne onThursday before easing on Friday to around $420. OTHER METALS: LME aluminium was down 0.1% at$1,996.50 a tonne, zinc rose 0.2% to $2,714, nickel slipped 0.6% to $18,280 and lead was 0.5% higherat $2,050. (Reporting by Peter Hobson; Additional reporting by Mai Nguyen;Editing by Jane Merriman and Jan Harvey)
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