Copper prices rose on Tuesday as the dollar slipped, but gains were capped by trade data from top consumer China, which fuelled worries about demand growth in the top consumer of the metal. Benchmark three month copper on the London Metal Exchange closed up 0.7 percent at $4,587 a tonne. China's overall exports fell a worse than expected 6.8 percent in November from a year earlier, their fifth straight month of decline, while imports tumbled 8.7 percent, their 13th consecutive drop.
However, its copper imports last month jumped 10 percent to 460,000 tonnes compared with November last year, as the price plummeted to 6-1/2 year lows of $4,443.50 a tonne and spurred opportunistic buying even as demand growth slows. "The latest trade data is disappointing as far as exports and imports are concerned, it's another weak growth signal for China and it's negative for miners," said Gianclaudio Torlizzi, managing director at consultancy T-Commodity.
"People needed to restock. It won't change the medium-term picture, which is still bearish because infrastructure spending is still weak." Clues to Chinese demand for industrial metals will come with investment and industrial production data on Saturday. A weaker US currency makes commodities cheaper for non-US firms. Traders expect to see a subdued market until after the US Federal Reserve's monetary meeting next week.
Expectations are for it to raise interest rates, which would boost the US currency and make commodities more expensive for non-US firms, a relationship used by funds to trade metals. "From a fundamental perspective, we see limited reason for a sustained rally into year-end," Standard Chartered said in a note. "Demand trends have shifted little, suggesting only a gradual slowdown in activity ahead of the Lunar New Year period in China."
China's trade data also showed that its aluminium exports in November rose to 450,000 tonnes, equal to the second highest on record, which weighed on prices. "Structural oversupply in the global aluminium market has persisted for several years," Societe Generale said in a note. "(It) shows little sign of reversing anytime soon, especially because of oversupply in China and the continued export of semi-manufactured products from China."
Three-month aluminium ended down 0.5 percent at $1,477 a tonne, zinc finished unchanged at $1,531, lead gained 0.6 percent to close at $1,697, tin dropped 1.4 percent to $14,400 and nickel shed 0.6 percent to $8,700. "It is only a matter of time before the industry is forced into large scale production cuts in order to restore supply and demand balance and to bring down the level of inventory that exists on world markets," Investec said in a note.
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