July 26, 2017 / 10:57 AM / 3 years ago

METALS-Copper hits two-year high as China looks to cut scrap imports

* LME/ShFE arb: tmsnrt.rs/2oQ5nm2 (Updates with closing prices)

By Peter Hobson

LONDON, July 26 (Reuters) - Copper rose for a fourth day to the highest in more than two years on expectations of solid Chinese economic growth and curbs on scrap imports to China that could boost demand for refined copper in the world’s largest metals consumer.

A weaker dollar and tight supply forecasts also buoyed prices, said ABN AMRO analyst Casper Burgering, with aluminium, nickel and tin also at, or near, multi-month highs.

But traders said gains had faltered as investors and producers cashed in on higher prices.

“I would advise to sell rallies from here unless we close above the recent high of $6,400,” said Robin Bhar, head of metals research at Societe Generale.

COPPER: Benchmark copper on the London Metal Exchange closed up 1.7 percent at $6,330 a tonne after earlier touching $6,400, its highest since May 2015.

TECHNICALS: Rises above key technical levels triggered further buying as copper has climbed more than 5 percent in two days in the biggest volumes since November. “Options covering and momentum buying are all in the mix,” said Bhar.

CHINA SCRAP BAN: Traders said prices rose on news that China could ban imports of some scrap metal, including copper, from the end of 2018, likely increasing demand for imported refined copper.

BAN IMPACT: However, metals researcher Antaike said the ban would likely affect less than the 1 million tonnes of imports that market participants were speculating could be impacted.

CHINA GROWTH: Metals were also supported by a better demand outlook from China after second-quarter growth beat expectations and the International Monetary Fund raised the country’s 2017 growth forecast.

DEMAND: China accounts for nearly half of global copper consumption estimated at 23 million tonnes this year.

COPPER STOCKS: On-warrant stocks available to the market at LME-registered warehouses fell to 221,125 tonnes after 6,425 tonnes of cancellations, but were still up from a low of around 140,000 tonnes in May. MCUSTX-TOTAL

U.S. FED: The Federal Reserve was expected to hold interest rates unchanged in a decision to be announced at 1800 GMT.

CURRENCY: The U.S. dollar has weakened for five consecutive months, making dollar-priced metals cheaper for holders of other currencies and supporting demand.

FREEPORT: Indonesia’s Mining Ministry said key issues still needed to be resolved before U.S. miner Freeport McMoRan Inc gets a new operating permit for its Grasberg copper mine, the world’s second largest.

PRICES: Aluminium closed up 0.6 percent at $1,942 a tonne, nickel ended 0.3 percent higher at $10,040, zinc finished down 1 percent at $2,808, lead slipped 0.2 percent to $2,313 and tin finished up 0.1 percent at $20,325.

Additional reporting by Melanie Burton; Editing by Louise Heavens and Mark Heinrich

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