Base metals ended with pared losses as downside support levels held, after extending midsession declines at one stage during Tuesday afternoon ring trading on the London Metal Exchange (LME). Benchmark metal copper rallied from a low around $3,035, regaining $3,050, to end the rings at $3,054, still down from the $3,072 Monday kerb close. Overall trading conditions were thin for most of the session, however, and price movements were kicked off by low-volume orders. The early-afternoon decline was initiated by CTA sales triggering sell-stops before late covering.
Fund involvement was equally low-profile, with direction in the metals complex still clouded by short-term uncertainty.
"Near-term movements are typically 'spin-of-the-coin' stuff. People have positions, but they are not as large as they used to be," a fund source said.
"For some of us, it has been a tough start of the year, with the dollar movements - we'll have to see how next month pans out," he added.
Traders and analysts said constructive data on China's economic growth late last year lent underlying support to the base metals market.
China's economic growth sped up to 9.5 percent in the year through the fourth quarter of 2004, but a senior official dampened speculation on Tuesday of any imminent currency revaluation or interest rate rise to curb the rampant economy.
Copper prices shed some 10 percent in two days last April as China took steps to cool its red-hot economy.
Economists at Barclays Capital noted, however, that China's Q4 fixed asset investment continued to decelerate in December.
"While slowing, these are still healthy growth numbers for the industrial metals, especially set against critically low inventory levels," the bank said in a daily note.
Nearby tightness continued to feature in the copper market, with the cash/threes backwardation cranking out to $154/160 from Monday's $144. Cash/one day business was seen at $4.00 backwardation, while cash/February traded at $9 premium.
Traders said there are pockets of tightness between now and the February date. But otherwise tightness appears evenly spread over the full period.
Aluminium was hit by sell-stops under $1,815, and momentarily threatened a clear break below the 100-day moving average near $1,800 before final trade at $1,807, down $31.
Zinc was hit by profit-taking prompted by Monday's fresh 7-1/4-year high of $1,307, ending at $1,275, down $15. Lead dropped to $910, down $11. Tin was $75 lower at $7,725, but nickel eked out a $50 gain at $14,200.