Shanghai copper was steady on Tuesday, barely managing a sixth day of gains, and London futures also lost momentum as investors awaited progress on the latest plans to rescue the US economy and its financial institutions. President Barack Obama urged swift action on an $800 billion economic stimulus bill, which passed a key procedural hurdle in the US Senate on Monday.
But analysts said it was still too early to call an end to the rapid downturn in prices and demand. Metals bulls are banking on a US turnaround and rising Chinese demand, citing record Chinese copper inventories in December, which may be repeated in January, and low stock levels in Shanghai Exchange warehouses.
"You can paint a positive picture if you just look at trade and inventory data, but overlay that against other data and the picture changes," said Mark Pervan, senior commodities analyst at ANZ. "The biggest copper user in China is the power industry, which is on its knees - illustrated by the sharp drop in January output. LME stocks are clearly not showing demand improvement and it's still more comfortable to be bearish."
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