Copper hits one-month high; zinc buoyed by persistent shortage

Copper prices hit a one-month high on Tuesday as inflation figures in top consumer China pointed to further signs of economic recovery, while zinc hit a three-week peak on persistent supply shortages. Chinese producer prices surged the most in more than five years in December as prices of coal and other raw materials soared, reinforcing views that the world's second-largest economy is on a steadier footing.
Investors are cautious, however, ahead of US President-elect Donald Trump's inauguration on January 20. A risk of profit-taking in China is also in prospect before the Lunar New Year later this month. "Near term, we could see a slight correction, copper has done a lot over the last couple of months and needs to consolidate, but the longer term outlook is positive. We see a deficit in 2017," said Warren Patterson, commodities strategist at ING.
Three-month copper on the London Metal Exchange closed 3 percent higher at $5,760 per tonne, having earlier hit its highest level since December 13 at $5,779. In industry news, Indonesia will issue new rules on mineral concentrate exports and taxes on shipments in the next few days. A full ban on exports of concentrates like copper is due to start on January 12 but the government will allow shipments to continue beyond that deadline in some cases.
Zinc closed up 2 percent at $2,720 a tonne, having earlier hit its highest level since December 16 at $2,766. Lead closed up 3.9 percent at $2,190, having earlier hit $2,191, its highest level since December 21. Processing fees for China's zinc smelters reached record lows last month as the supply from mines continued to dwindle. "The (zinc concentrates) market is tight and there's plenty of smelting capacity in China. We need to get to that (price) level where the likes of Glencore say, 'OK we're going to restart production'," said Patterson.
Aluminium ended up 1.3 percent at $1,749, having earlier hit $1,752, its highest level since December 12. The price has been aided by the recent rally in oil prices, as energy accounts for about 40 percent of the total cost of producing aluminium. Nickel closed up 2.2 percent at $10,615, while tin ended up 0.1 percent at $21,145.