(Adds analyst comment, updates prices, changes dateline from BEIJING)
By Eric Onstad
LONDON, Feb 1 (Reuters) – Aluminium dropped on Friday on worries about excess supply after the top producer said it would resume some output, while other base metals were weighed down by weak Chinese factory data.
China Hongqiao Group, the world’s top aluminium smelter, said it would gradually restart production after the expiration of some government-mandated output curbs.
“We haven’t seen significant production cuts this year and we’ve been expecting to see additional supply after the expiration of the limited cutbacks,” said Ross Strachan, senior commodities economist at Capital Economics.
“There is also new capacity coming on stream both within China and elsewhere in the world, particularly a very large expansion in Bahrain.”
Benchmark aluminium on the London Metal Exchange was the biggest decliner, slipping 0.9 percent to $1,893.50 a tonne by 1047 GMT.
* CHINA PMI: China’s factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed, reinforcing fears a slowdown in the world’s second-largest economy is deepening.
“Generally we’re confident that there will be significantly slower growth over the next six months. You’ve got the weakest credit growth in China for a decade and that does tend to lead to weak demand, so that’s why we see further downside in almost all the industrial metals,” Strachan said.
* COPPER: Three-month LME copper fell 0.7 percent to $6,125 a tonne, having hit a seven-week high in the previous session. The metal, widely used in manufacturing and construction, is heading for a weekly rise of about 1 percent.
* COPPER: Top copper miner Codelco said it had struck a contract deal with the union of supervisors at its Gabriela Mistral mine in northern Chile, averting the threat of a strike.
* TRADE TALKS: U.S. President Donald Trump said he would meet China’s Xi Jinping soon to try to seal a comprehensive trade deal, citing substantial progress.
* ZINC/NICKEL: Steel-linked zinc and nickel were the only LME metals in positive territory, taking heart after prices of steel-making raw materials in China climbed to multi-month peaks on Friday, buoyed by supply disruption issues.
* LME zinc, mainly used to galvanise steel, rose 0.1 percent to $2,720.50 a tonne, while nickel, largely used for making stainless steel, added 0.2 percent to $12,505 a tonne.
* For the top stories in metals and other news, click or (Additional reporting by Muyu Xu and Tom Daly in Beijing; Editing by Dale Hudson)
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