Copper little changed

Copper was little changed on Tuesday after rising more than 2 percent in the previous session as concerns over weak demand in China offset prospects the Federal Reserve will take further steps to loosen the US monetary policy. Base metals have struggled to break out of a recent trading range on mixed signals on economic growth in the United States and China, the world's largest consumer of copper.
Three-month copper on the London Metal Exchange closed at $8,535 per tonne little changed compared with $8,533 at the close on Monday. The metal hit $8,765 last month, its highest in around five months, but has since failed to break through that level. It rose by the most in more than two weeks on Monday as the dollar weakened after Bernanke said loose monetary policy was still needed to reduce unemployment, even though the US economy haad shown signs of improvement A weaker dollar makes commodities priced in the US unit cheaper for holders of other currencies.
The fundamentals picture however, remained weak.
"I don't expect copper to break out of the $8,200-8,765 range. Before you see a pick up you need to see premiums rising in China, you need Chinese players to offloads the extra inventories and you need a pick up in consumption," said Andrey Kryuchenkov, an analyst at VTB. "Yes, February copper imports were better than people expected but that is all stockpiling from Chinese players hoping for a pickup in consumption rather than end-users demand."
China's imports of copper rose 17.1 percent to 484,569 tonnes in February from 413,964 tonnes in the previous month, data from the General Administration of Customs showed this month. China's industrial firms suffered a rare drop in profits in the first two months of 2012 mainly in petrochemicals, metals and auto firms, the latest signs of weakness in the world's No 2 economy and top metal consumer. "We are in a seasonally strong period for metals, but we are running out of time. We've got six more weeks, then we get to mid-May when the market is starting to look at the summer slowdown," Dan Brebner, an analyst at Deutsche Bank, said.
"The China demand situation looks much less robust than the market would like, but the market is holding up despite all these factors." Bearish US housing data also weighed on copper. Contracts to buy previously owned US homes unexpectedly fell in February, suggesting a further pullback in sales as the housing market struggles to regain its footing.
"A US-led recovery would certainly be bullish for commodities, especially oil, but a concurrent slowdown in China would certainly tame any price appreciation especially in the metal sector," RBC said in a research note. "And this is where we find ourselves, oil in a slow move higher while base metals range-trade. The eventual break will be driven by the US and China moving lock step to greater growth."
"Galvanised steel producers have been restocking since the end of February, so we see some fundamental support for zinc. The short-term downside risk to zinc is still limited, but I don't see much momentum to push the price above the marginal cost level because there is still huge inventory," she said. "For lead, the fundamentals are much better. Smaller lead acid battery plants have ramped up production since the end of February. Automakers have also raised production 10-15 percent in March, at the same time bike production is also recovering from the Chinese New Year period," she said. Three-month zinc finished at $2,034 from $2,021 at the close on Monday, while lead ended at $1,986 from $2,002. Tin closed at $22,600 from $22,500, aluminium at $2,196 from $2,186 and nickel at $17,785 from $18,130.