LONDON, Aug 6 (Reuters) - Copper prices drifted lower onThursday as investors questioned whether demand would improveenough to extend a rally beyond two-year highs reached lastmonth.
The metal used in power and construction rebounded from alow of $4,371 a tonne in March to a high of $6,633 in July asChina, the biggest consumer, unwound coronavirus lockdowns.
But since then prices have moved sideways. Benchmark copper
"The market doesn't know where to go given that outsideChina you have negative demand growth," said Julius Baer analystCarsten Menke.
The coronavirus was not disrupting supply as much as fearedand the market will be in surplus through the rest of the year,he said.
"My target is $6,250. Current levels are basically fairvalue."
FACTORIES: Orders for German-made goods rose sharply in Junebut remained far below pre-pandemic levels, according to datathat fits into a wider rebound in global manufacturing activity.
VIRUS: But the number of coronavirus cases is still risingin a number of countries.
MARKETS: Stocks slipped on deadlock over a U.S. coronavirusaid package, U.S. unemployment data and disappointing corporateearnings reports.
WEAKNESS: "We see continued strength in Chinese copperdemand failing to offset the weakness in the rest of the worldfor a while yet," said analysts at ANZ.
"Demand will fall 4% in 2020, with growth remaining subduedin 2021," they said, forecasting prices at $6,000 in threemonths.
CHINA DEMAND: Researchers Antaike said China would import3.5 million tonnes of copper this year, down from 3.55 milliontonnes in 2019.
PNG: Papua New Guinea's Ok Tedi mine suspended operationsfor at least 14 days, cutting its copper output by about 4,000tonnes.
CHILE/PERU: Copper output in Chile and Peru, the biggestproducers, had bounced back from coronavirus disruption by June,government data showed.
OTHER METALS: LME aluminium
(Reporting by Peter Hobson; Additional reporting by Tom Daly;Editing by Jane Merriman and David Evans) ((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))
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