Demand concerns led copper to pare gains it made earlier on Monday, inspired by the weaker dollar and rising Chinese imports. China imported 141,728 tonnes of refined copper last month, 37.7 percent more than in November 2007, official customs figures showed. "Any good news that is coming out of China is being offset by weak underlying demand," said Michael Widmer, analyst at BNP Paribas.
"The picture for all the base metals is that underlying fundamentals remain relatively weak." China's apparent copper demand jumped in November from the previous month as imports rose, Reuters calculations based on customs and output data showed. Copper for three month delivery on the London Metal Exchange hit a session high of $3,065 a tonne before demand concerns and higher inventories trimmed gains.
"Most of it appears to be due to the (stronger) euro and weaker dollar," said Leon Westgate, an analyst at Standard Bank on the base metals complex. "You had the Chinese import data ... (But) the market is all over the place. "I would expect the general trend to be sideways - a bit volatile - heading on for the new year," Westgate added.
The metal closed at $2,960 a tonne from $2,930 on Friday. China, the world's fourth-largest economy, cut interest rates on Monday in a campaign to fend off a deepening economic slowdown. The country's factory output expanded just 5.4 percent in the year to November, the weakest pace for a non-holiday month on record, and its exports declined for the first time in more than seven years.
"China was the main demand driver and China is slowing down now," said Widmer. Prices for copper have fallen about 65 percent since a record high of $8,940 in July. The outlook for copper will depend on just what happens to Chinese demand, said David Thurtell, a strategist at Citigroup said. "There's been a lot of stimulus ... a lot of rescue packages are encouraging."
Highlighting the uncertain nature of the rise in industrial metal prices, LME copper stocks climbed 3,200 tonnes to 327,500 tonnes - the highest since February 2004. Aluminium prices closed at $1,555 from $1,516 on Friday. The metal was supported by the US government's plans to put forward up to $17.4 billion in emergency loans to struggling US automakers, who are expected to access the money immediately.
The Canadian government is set to follow suit. The metal used in transport and packaging has come under pressure in recent weeks amid deteriorating car sales data from auto makers. Rising inventories added to the underlying negative sentiment as aluminium stocks jumped 39,350 tonnes to 2.19 million tonnes - a 14-year high.
Lead jumped 7.5 percent to $915 a tonne, from $851 on Friday, before easing to $908. Nickel closed unchanged at $10,300 a tonne, tin was at $10,305 from $10,705, and zinc rose to $1,180 from $1,160. "The markets have been pretty quiet leading up to Christmas," said one LME trader. "I think it's going to remain that way until maybe the last couple days of the year." "I think there's some short sellers out there.