September 19, 2019 / 12:24 PM / 2 months ago

METALS-LME copper declines on weak demand and a guarded Fed

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

* Premium for cash over 3-month nickel flares out (Updates prices)

By Pratima Desai

LONDON, Sept 19 (Reuters) - Copper prices eased on Thursday as the market focused on weak demand in top consumer China and a meeting in Washington between Chinese and U.S. officials aimed at resolving a prolonged trade dispute.

Benchmark copper on the London Metal Exchange was untraded in official rings but was bid 0.5% down to $5,785 a tonne.

“Macro sentiment is the major influence on metals at the moment,” said Liberum analyst Ben Davis. “Nothing rings alarm bells on the fundamentals. Chinese demand has been weak, but it’s nothing catastrophic.”

TRADE: U.S. and Chinese officials resume face-to-face talks for the first time in nearly two months as the world’s two largest economies try to bridge policy differences and find a way out of their bitter trade war.

The negotiations on Thursday and Friday are aimed at laying the groundwork for high-level talks in early October that will determine whether the two countries are working towards a solution or are headed for new, higher tariffs on each other’s goods.

RATES: The U.S. Federal Reserve cut interest rates on Wednesday to help to sustain a record-long economic expansion but signalled a higher bar to further reductions to borrowing costs.

Describing the U.S. economic outlook as “favourable”, Fed Chair Jerome Powell said the rate cut was designed “to provide insurance against ongoing risks” including weak global growth and resurgent trade tensions.

“Whilst the 25 basis point cut was expected, that policymakers are split on further easing action has caught the market off guard,” Marex Spectron analysts said in a note.

TECHNICALS: Price support for copper comes in at the 21-day moving average around $5,760. Upside moves face the 50-day moving average around $5,830 followed by the 100-day moving average at $5,900.

NICKEL: The premium for cash nickel over the three-month contract ended at $105 a tonne on Wednesday after flaring out to $150, near the $163 hit last week, its highest since April 2009.

Traders said the rise was because of nervousness about availability of the steelmaking ingredient on the LME market owing to one company holding large numbers of warrants <0#LME-WHL> and falling stocks in LME-approved warehouses. MNISTX-TOTAL

Three-month nickel was down 0.5% at $17,110 a tonne.

PRICES: Aluminium gained 0.2% to $1,790, zinc fell 0.9% to $2,298, lead rose 1% to $2,091 and tin was down 1% at $16,475. (Reporting by Pratima Desai Additional reporting by Mai Nguyen Editing by Dale Hudson and David Goodman)

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