Copper flat in thin trade, shrugs off nuclear test

SINGAPORE: London copper was stuck in a holding pattern on Tuesday with traders reluctant to take big positions due to a week-long holiday in top consumer China, with markets also largely shrugging off a nuclear test by North Korea.

Metals have been bolstered by hopes that Chinese industrial buyers will return next week, as economic growth has steadily improved since bottoming out in October.

But markets were quiet, with turnover of around 1,000 lots of all three-month LME contracts, even in the wake of news North Korea conducted its third-ever nuclear test.

"I'm not expecting to see much in the markets this week because of the Chinese holiday, but generally we should see prices hold up," said Alexandra Knight, a Melbourne-based economist with National Australia Bank.

"It looks like there's a bit more optimism about Chinese buying coming back after the holidays."

Three-month copper on the London Metal Exchange was little changed at $8,194.75 a tonne by 0721 GMT, after falling more than 1 percent in the previous session.

Copper last week rallied to its highest in four months at $8,346 a tonne. Although gains have petered off, prices are still up more than 3 percent so far this year.

North Korea's nuclear test was likely to anger its main ally China and increase international action against Pyongyang and its new young leader, Kim Jong-un. The test prompted the UN Security Council to call for an emergency meeting later on Tuesday.

The Shanghai Futures Exchange is closed all week, while markets in Hong Kong and Singapore will reopen tomorrow.

In wider markets, European stock index futures pointed to a lower open on Tuesday, adding to the previous session's losses as a lack of positive catalysts prompts investors to move to the sidelines.

Investors are waiting for key events such as the US president's State of the Union address later in the day.

China's exports and imports surged and new lending soared in January as the first hard data of the year released last week signalled not only a solid recovery in domestic and overseas demand, but also the risk that inflationary pressures are building.

Brightening the picture for Chinese demand has been a revival in its top export markets - the United States and Europe.

Moody's Investor Services on Tuesday said downside risks for the global economy had receded in the past three months, though a number of dangers still remained.

In the absence of other drivers, traders are expecting metals to gyrate with currency markets.

Against the dollar, the euro slipped 0.2 percent to $1.3381 EUR=, closer to its Feb. 8 low of $1.3353 and was well off its 15-month peak of $1.3711 set on Feb. 1.

The Group of Seven nations are considering a statement this week reaffirming their commitment to "market-determined" exchange rates in response to heating rhetoric about a currency war, G20 officials said on Monday.

TIN EXPORTS TO DROP

An increase in January tin exports from Indonesia was driven by higher LME prices but shipments are expected to fall over the coming months as new purity standards are introduced and smelters upgrade ahead of a change of regulation, broker Triland said in a note.

Refined tin shipments from Indonesia, the world's top exporter, rose 5.4 percent in January to 9,154.71 tonnes from 8,689.20 tonnes in December.

Indonesia will increase its minimum purity requirements for tin ingot exports from July this year as it seeks to bolster its domestic processing industries.