Shanghai copper futures edged up on Thursday, tracking modest gains in London prices despite a rise in stocks, while zinc and lead hovered close to new highs set in the previous session.
Copper on the Shanghai Futures Exchange rose, with the most active December contract closing the morning session 70 yuan higher at 70,630 yuan.
"Turnover has certainly picked up a little bit today compared with the last few sessions, and after recent dips on copper, maybe these levels are seen as a buying opportunity," said a Shanghai-based trader.
"As for zinc, tin and lead, there's still room for moves higher on the stocks situation." London Metal Exchange copper for delivery in three months was trading at $7,520 a tonne by 0429, up from $7,455 at the London close. Sentiment was buoyed after 6,000 workers at the Norte division of state-run Codelco, the largest division of the world's largest copper company, rejected early negotiation of a new three-year contract.
To avoid a strike, the two sides must reach an agreement before the existing contract runs out on December 31, and regular negotiations are set to begin on November 17, when the four unions involved in negotiations must formally present their contract demands to the company.
But rising inventories of copper was seen capping any rise, analysts said. The arrival of material in St Louis on Wednesday marked the first time this warehouse has held metal since 2003, providing physical evidence of a slowdown in demand from the housing sector in the United States, said Peter Richardson, chief metals economist at Deutsche Bank.
Three-month zinc rose to $4,085 per tonne, from $4,040 at the close on Wednesday, when it touched a record $4,140 - representing a 6.2 percent jump since Tuesday's close of $3,900. Buoying sentiment were comments by world number two zinc producer Zinifex Ltd on Thursday which projected high prices, despite churning out more of the metal in its first quarter, in the face of a growing world supply shortfall.
"Tight supply and continuing strong demand suggest a very positive outlook for zinc prices for the rest of the financial year," Zinifex Chief Executive Greig Gailey said in a statement. Zinc inventories in LME warehouses are at their lowest levels in more than a decade, at 115,650 tonnes as of Wednesday, against average daily world consumption of around 29,000 tonnes.
But lead output nearly halved to 28,233 tonnes due to a previously advised one-in-20 year shutdown at its Port Pirie blast furnace in Australia, although most of the losses would be recovered over the rest of the year, Zinifex said. Lead was also holding at $1,565, just off a new contract high of $1,590 hit on Wednesday.
Traders said the decision by the Federal Open Market Committee to maintain rates at 5.25 percent had been priced in, although concerns remained about weaker US growth after the central bank was less harsh on a warning about inflation than some had expected.