METALS-copper Falls From Two-week Highs As Factory Activity Slows

(Updates prices, adds North America factory data, column)

LONDON, Sept 1 (Reuters) – Copper prices fell sharply on Wednesday after data showed that factory activity slowed in August across swathes of Asia and Europe.

In China, by far the biggest metals consumer, manufacturing contracted for the first time in nearly 1-1/2 years.

Benchmark copper on the London Metal Exchange (LME) was down 1.9% at $9,339.50 a tonne at 1601 GMT.

However, prices are still up 20% this year after rising 26% in 2020, with analysts optimistic that demand for the metal used in power grids will increase as the world ditches fossil fuels for electrification.

Copper reached a record high of $10,747.50 in May and a 4-1/2 month low of $8,740 in mid-August.

Fundamentals have improved in recent weeks, said Citi analyst Oliver Nugent, pointing to falling exchange stockpiles, higher Chinese import premiums, lower speculative positioning and expectations for more economic stimulus. MCUSTX-TOTALCU-STX-SGHSMM-CUYP-CN

“Fundamentally we think we’re at the right levels,” he said. “We see copper a little above $9,000 on average next year.”

INDUSTRY: Factory activity lost momentum in most of Asia and Europe in August but accelerated in the United States and Canada.

JOBS: U.S. private employers hired far fewer workers than expected in August, but the labour market continues to recover steadily.

MARKETS: Global equities rose to new highs as investors predicted more stimulus.

CHINA: The state reserves administration in China said it released 150,000 tonnes of copper, aluminium and zinc into the market, completing the third round of metal auctions designed to keep a lid on prices.

NICKEL: The premium for LME cash nickel over the three-month contract surged as high as $100 a tonne – the highest in two years – from about zero a week ago, pointing to tighter supply of quickly deliverable metal. CMNI0-3

COLUMN: China is battling with aluminium’s decarbonisation paradox, writes Reuters columnist Andy Home.

PRICES: Benchmark LME aluminium was down 1.1% at $2,688.50 a tonne, zinc dropped 0.7% to $2,981.50, nickel fell 1.2% to $19,320 and tin was down 1.3% at $33,465.

Lead bucked the trend, rising 0.9% to $2,277. (Reporting by Peter Hobson Additional reporting by Mai Nguyen in HANOI Editing by David Goodman and Mark Potter)