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Copper prices fall on the back of weak Chinese data but losses are capped by concerns about supply

Copper prices fell on Wednesday, despite disappointing economic data from China's top metals consumer. However, supply concerns due to mine disruptions and the Middle East conflict helped to limit losses.

The benchmark three-month copper price on the London Metal Exchange fell 0.2%, to $13,610 per metric ton at 0945 GMT. It had reached a three week high in the previous session.

Official data revealed that the GDP growth of China, the second largest economy in world, has slowed to a low of 3.5 years, due to weak domestic demand.

Ole Hansen is the head of commodity strategy for Saxo Bank, a Copenhagen-based bank.

Hansen said that the downside of the market was limited, in part due to persistent supply problems.

The Shanghai Futures Exchange's most traded copper contract pared earlier gains and ticked 0.1% higher, to 104 220 yuan (15,392.11) per ton.

Rio Tinto reported a 7% drop in copper production for the quarter ending June. The company said that a furnace failure at its U.S. Kennecott Mine will affect production during the second half.

Hansen said, "We continue to be reminded of the potential risks on the supply-side and the high prices for energy will just increase the focus on electricification."

The oil prices rose by another 2% on Tuesday after the U.S. reinstated a naval embargo on all Iranian ports, and Iran threatened to close other export routes.

Hansen stated that "the long-term bullish'story for copper has most definitely not been negatively affected by the events in the last few months."

Other metals include?LME Aluminium, which fell by 0.5% to $3.160 per ton. Zinc also dropped by 1%, to $3.561, while lead was down 0.6% at $1.855. Nickel was down 0.2% at $16,740, and tin lost 0.9%, to $53,340.

(source: Reuters)