Copper prices edged higher on Wednesday, supported by low inventories and gains in gold, but trade remained subdued with the market waiting for US investors to return from holidays. London Metal Exchange copper for delivery in three months was up $25 at $7,425 a tonne.
On Select, the electronic trading platform, the metal had traded between $7,350 and $7,475. On Tuesday, copper ended up $125 or 1.7 percent at $7,400, supported by falling inventories in very thin trade.
"With every LME metals recording falls in inventory, supply tightness was again at the forefront of market attention," Peter Richardson, chief metals economist at Deutsche Bank, said in a daily note.
"Especially in metals such as copper, nickel and zinc where available stocks after adjusting for cancelled warrants are at or are approaching cyclically low levels.
"The only exception to this trend was aluminium where inventories have barely changed over the last quarter." The metals market shrugged off the news that North Korea test-fired missile. But it unnerved some investors, pushing up gold prices and dragging down Asian stocks and currencies.
"If the news continues putting pressure on the equity and currency markets, we may see some impact on industrial metals," said an LME dealer in Tokyo. "But at the moment, the metals market has shown no reaction to the news."
He put resistance for copper at $7,600/$7,700 and support at $7,000. Prices of copper, used in construction and electronics and a barometer for industrial demand, reached a record $8,800 on May 11.
Since then, the red metal has fallen about 16 percent, but it is still up 69 percent from the end of last year. In New York, Comex resumed its electronic trade after closing on Monday and Tuesday for the US Independence Day holiday.
In electronic trade, the most active September copper rose 4.50 cents to $3.4000 a lb after trading between $3.3600 and $3.4100 on Comex. In Shanghai, the most active September copper contract ended the session up 780 yuan from the previous close at 66,700 yuan ($8,337) a tonne.
"Shanghai copper is still in a rebound mode after a big fall from its peak in May," said Zhou Yixing with Jiangsu Swum Futures Brokerage. "But the rebound in Shanghai turns weak as there has been no fresh fund buying in commodities on overseas markets."
But Shanghai's most active September aluminium futures fell 100 yuan a tonne to end the session at 19,610. "Aluminium futures trading is thinner and thinner," said Fang Guanghui at Henna Wanda Futures Brokerage.
"Few funds are willing to take long positions." LME aluminium was unchanged from the London close at $2,590 a tonne, while zinc was up $20 at $3,320. In other commodities, gold, traditionally a haven in times of crisis, rose more than 1 percent to a one-month high of $629.75 an ounce and London Brent crude oil rose 0.6 percent to about $72.94 per barrel.