(Updates with official prices)

LONDON, June 18 (Reuters) – Copper on Friday was on track
for its biggest weekly fall since March 2020 after the Federal
Reserve signalled it would begin to tighten monetary policy and
China said it would sell state reserves to limit prices.

The shift in tone from the U.S. central bank also pushed the
U.S. dollar towards its largest weekly gain since September,
making metals more expensive for buyers with other currencies.

Benchmark copper on the London Metal Exchange (LME)
was down 0.9% at $9,230 a tonne in official trading and down
nearly 8% this week.

The sell-off follows a remarkable rally, with the metal used
in power and construction reaching a record high of $10,747.50
in May.

“We probably have seen the peak for this year,” said ING
analyst Wenyu Yao, adding that rising demand from infrastructure
building and electrification would likely keep prices around
current levels in the coming years.

FED: Fed officials, increasingly confident the U.S. economy
is recovering fast from the pandemic-induced recession, have
begun telegraphing an exit from the central bank’s
extraordinarily easy monetary policy.

CHINA: Analysts at Macquarie said they expected China’s
state metal sales to be relatively small – around
300,000-500,000 tonnes for aluminium – and to decrease as prices
come down.

OUTLOOK: Macquarie also said it expected a deficit of copper
this year, small surpluses over 2022-2024 and structural
undersupply from 2025. They said prices would average around
$8,000-$9,000 over the next four years.

TECHNICALS: Copper was holding around its 100-day moving
average at $9,242, a technical support level.

STOCKS: Copper inventories in LME-registered warehouses
continued to increase, rising by 24,925 tonnes to 168,675
tonnes, the highest level since April. <MCUSTX-TOTAL>

Stockpiles in warehouses registered with the Shanghai
Futures Exchange fell by 8,440 tonnes to 172,527 tonnes in the
week to Friday. <CU-STX-SGH>

CHINA TRADE: China’s aluminium imports declined in May and
its copper exports rose, customs data showed.

OTHER METALS: LME aluminium was down 0.8% at $2,380
a tonne, zinc fell 0.9% to $2,886.50, nickel
rose 1% to $17,342, lead rose 0.7% to $2,145 and tin
was down 1.5% at $30,134.
(Reporting by Peter Hobson; Additional reporting by Mai Nguyen;
Editing by Jan Harvey and Paul Simao)