Shanghai copper prices rose on Tuesday, in anticipation of healthy demand after the Chinese New Year holidays, while zinc and aluminium slid as investors took profit following gains in previous sessions.
But copper is not likely to surge in London during the week-long holiday, analysts said, as copper consumption by fabricators fell this winter compared with previous years because of the harsh weather.
The April copper contract the most active on the Shanghai Futures Exchange, rose 0.7 percent, or 420 yuan to 62,520 yuan ($8,702) at the close. Copper for delivery in three months on the London Metal Exchange rose $60 to $7,320 per tonne by 0700 GMT.
"Investors are eyeing rising demand after the Chinese New Year holidays, with the expected improvement in weather," said Cai Luoyi, an analyst at China International Futures. Cai said he did not expect much movement in London copper prices during the Lunar New Year break, as spot premiums in the Chinese physical market were thin on weaker demand compared with previous years.
Spot copper prices in Shanghai were up 50 yuan on Tuesday, ranging between 62,650 yuan and 62,850 yuan. Spot premiums were little changed around 100 yuan a tonne. "Investors quit the market gradually ahead of the Lunar New Year holidays, cutting positions to avoid risks, which was also partly due to temporary hikes in trading margin requirements," Cai added.