* Glencore shares vs copper: http://link.reuters.com/tut55w
* Copper may be moving towards balanced market
* Mine supply also underperforming
* Glencore move follows Freeport
By Pratima Desai
LONDON, Sept 7 (Reuters) - Glencore's move to slash copper
output will help shore up prices, but significant gains are
unlikely because supplies are still adequate and growth in
demand is weak, particularly from top consumer China.
The London-listed mining giant GLEN.L said it plans to
suspend 400,000 tonnes of copper output at its Katanga Mining
KAT.TO unit in Democratic Republic of Congo and at Mopani
Copper Mines in Zambia over the next 18 months.
"It's probably not enough to see prices go up, but it
certainly supports the market," said Grant Sporre, head of
metals research at Deutsche Bank (XETRA:DBKGn).
"It also ensures that copper is probably not going to fall
in the same way that iron ore and met coal have done."
Benchmark copper CMCU3 on the London Metal Exchange rose
about $90 to near $5,200 a tonne on Monday after Glencore's
announcement, but that is still about 20 percent below its 2015
peak at $6,481 a tonne.
Prices of the metal used in power and construction hit a
six-year low of $4,855 a tonne last month on escalating worries
about economic growth and demand in China, which accounts for
about half of global consumption.
"It will help the market, people weren't expecting
significant cuts," said David Wilson, analyst at Citi. "We'd
already been assuming a deficit market for next year because of
mine supply underperforming significantly."
Power outages, strikes, floods, drought and lower grade ore
have already cut mine supplies this year.
Last month U.S. miner Freeport-McMoran Inc FCX.N became
one of the first big global mining companies to begin cutting
copper production due to slumping prices.
Glencore's 400,000-tonne cut is a fraction of global demand
estimated at around 22 million tonnes this year, but it could
mean a more balanced market this year and possibly a small
deficit next year.
"It's a meaningful number in terms of swinging the market
from oversupply to deficit," said John Meyer, mining analyst at
SP Angel. "It could squeeze the short sellers."
Funds and many traders have sold copper on the expectation
of lower prices in the future due to a stronger dollar, which
makes commodities more expensive for non-U.S. firms, and weaker
demand from China.
Growth in Chinese demand for copper is expected to have
fallen sharply this year from levels above five percent last
year.
"Estimates we are seeing ... are in the low single digits,"
INTL FCStone analyst Edward Meir said in a note.
"Some are even speculating about negative numbers when 2015
is finally put to bed."
Data from the International Copper Study Group shows the
copper market in January to May saw a surplus of 4,000 tonnes
compared with a deficit of 537,000 tonnes in the first five
months of last year.
Deutsche was forecasting a surplus of 350,000 tonnes for
2016. "They are going to remove effectively about 300,000 tonnes
for next year," Sporre said. "I know they say 400,000 tonnes,
but that's for an 18-month period. So that brings the market
pretty much into balance for next year."