Copper prices crept up in thin trade on Monday as investors stayed on the sidelines ahead of the US Federal Reserve's decision this week on interest rates, which may dent demand and lead to slowing economic growth.
London Metal Exchange copper for delivery in three months was at $6,900 a tonne, up $120 or 1.8 percent from Friday's London close. There were only seven lots traded on electronic trading platform Select. One lot is 25 tonnes.
"Metals market movements continued to be dictated more by macroeconomic views than traditional supply and demand fundamentals which usually have a greater bearing on price direction," Peter Richardson, chief metals economist at Deutsche Bank, said in a daily note.
"Sentiment remains fixated on the expected Fed interest rate hike and whether or not that move will contribute to a fall in demand for industrial metals." Analysts expect a quarter of a percentage point rise in US interest rates to 5.25 percent from the June 28-29 meeting, but money managers will scrutinise the language used for signals about future policy.
On Friday, copper ended up $70 at $6,780, supported by a fall of 2,325 tonnes in LME stocks to 95,000 tonnes, or two days of world consumption, and threats to supply in Mexico and Chile.
Striking workers at two of Grupo Mexico's copper facilities have forced the company to declare force major, while in Chile unions at BHP Billion's Escondido are pushing for a pay rise of up to 10 percent and improved healthcare benefits.
Prices of copper, used in construction and electronics and a barometer for industrial demand, have gained 57 percent since the end of last year, but were down about 21 percent from their record high of $8,800 set on May 11.
The International Copper Study Group (ICSG) said copper mine capacity over the 2005 to 2009 period was projected to grow at an average rate of 4.3 percent a year, exceeding expansion of smelter capacity.
China imported 60.7 percent less refined copper in May than in the year, and exported 55 percent less primary aluminium, official customs figures showed.
In electronic trade, the most active September copper fell 1.10 cents to $3.1400 a lb after trading between $3.1200 and $3.1500 on the New York Mercantile Exchange's Comex division.
The latest Commitments of Traders data issued late on Friday by the Commodity Futures Trading Commission showed net non-commercial short positions for copper fell to 3,252 lots in the week ended June 20, from 5,656 lots the previous week.
Non-reportable net long positions rose to 1,380 lots, compared with 1,100 lots in the week ended June 13. In Shanghai, the most active September copper contract ended the session up 1,150 yuan from the previous close at 59,700 yuan ($7,462) a tonne after trading as high as 60,470 yuan.
"The market mood is still cautious and people are taking a wait-and-see attitude ahead of the Fed meeting this week," said Sheen Haihua, vice president of Maike Futures in Shanghai. Shanghai's most active September aluminium contract also gained 10 yuan a tonne to end the session at 19,730 yuan. LME aluminium was up $8 at $2,457 a tonne from the London close, while zinc was up $20 at $2,880.
In other commodities, oil inched down after signs of improved Iraqi production but held close to $71 a barrel as US gasoline demand is still growing despite near-record prices, while gold edged up to $584 an ounce on firmer oil prices.