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Copper prices were set for their biggest monthly rise since December 2017 as weak Chinese factory data and concerns over US-China trade talks were offset by falling stockpiles which point to a tight market.

Benchmark copper on the London Metal Exchange (LME) closed flat at $US6,509 a tonne.

It was up around 5.5 per cent in February, its second consecutive monthly gain.

The metal used in power and construction had plunged to a 1-1/2-year low of $US5,725 in early January as the trade dispute between the US and China threatened to accelerate an economic slowdown in China, the biggest metals consumer.

Data overnight showed factory activity in China contracted to a three-year low in February, the latest sign of weakening growth.

US President Donald Trump’s chief trade negotiator, meanwhile, said much work was still needed to nail down a US-China trade agreement and the United States would need to maintain the threat of tariffs on Chinese goods for years.

Yet traders remain optimistic that Chinese demand will hold up and market fundamentals will tighten over the coming months, BMO analyst Colin Hamilton said, predicting prices around $US7,000 by mid-year.

The US economy slowed less than expected in the fourth quarter, leaving 2018 growth just shy of the Trump administration’s 3 per cent annual target.

Supply of copper looked tight after on-warrant stocks available to the market in LME-registered warehouses fell to 21,600 tonnes from around 300,000 tonnes a year ago.

They are now the lowest since 2005.

Cash copper has also risen to a premium of $US46.50 a tonne over the three-month contract from a discount around $US20 a tonne earlier in February.

China’s strong imports help explain low LME metal stocks, writes Reuters columnist Andy Home.

Speculative investors are betting on higher prices.

Their net long in LME copper was at 9.4 per cent of open contracts as of Tuesday’s close and the highest since January 2018, brokers Marex Spectron said.

Battery metal lead closed up 0.7 per cent at $US2,151 after hitting its highest since late July 2018.

On-warrant LME lead inventories slid 42 per cent this week to 44,150 tonnes.

LME aluminium ended down 0.6 per cent at $US1,911 a tonne, zinc finished 1.2 per cent higher at $US2,778 after touching its highest since February 5, tin closed up 0.6 per cent at $US21,650 and nickel ended flat at $US13,050.