Copper hit its highest in more than a week on Thursday after US-China trade tensions eased, but gains were capped due to persistent worries about Chinese demand and global growth. China made its first purchases of US soybeans since President Donald Trump and his Chinese counterpart Xi Jinping struck a trade war truce earlier this month, while China also appeared to be easing its high-tech industrial push.
"We're in this weaker seasonal period and economic data points aren't going to be great, but the way the market is looking at it, any de-escalation of trade friction is viewed as positive for commodities and that's going to overarch anything else. We're very macro driven at the moment," said Colin Hamilton, director of commodities research at BMO Capital.
Some investors may also be unwinding a wider trade that's been in place for much of the year, going long on the dollar and short on commodities. "Trading days before year-end are few and far between so I think there could be a little bit of upside (for metals) if there's some profit-taking on that trade," Hamilton added.
Copper on the London Metal Exchange is down 14.5 percent year-to-date, largely on fears the trade tensions will hurt demand for industrial metals. Three-month LME copper closed open outcry activity up 0.2 percent at $6,155 a tonne after touching $6,231, the highest since Dec. 4.
Base metals were pressured by a firmer dollar after the European Central Bank trimmed its growth and inflation projections for next year and said the balance of risk was tilted towards the downside, weakening the euro against the dollar. Chile's Codelco said on Thursday its sprawling Chuquicamata copper mine was operating normally after workers blocked access to the mine overnight.
LME on-warrant aluminium inventories, those stocks not earmarked for delivery, rose by 24,950 tonnes to 853,375 tonnes, LME data showed on Thursday. They have surged 40 percent since the beginning of October. LME benchmark aluminium shed 0.4 percent to finish at $1,932 a tonne.
Short covering overnight boosted nickel, Alastair Munro at broker Marex Spectron said in a note. LME nickel added 0.5 percent to end at $10,850 a tonne. The annual reweighting of key commodity indexes in January will affect about 10.5 percent of average daily volumes (ADV) of zinc over each of five days and 7.7 percent of aluminium ADV, Societe Generale said in a note.
LME zinc slipped 0.2 percent to close at $2,566 a tonne, lead dropped 1.4 percent at $1,948 and tin added 0.4 percent to $19,400, after hitting $19,480, the highest since Nov. 21.
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