Copper climbed over 3 percent on Monday as the dollar fell and unexpectedly strong Chinese import data brightened the outlook for metals demand and strengthened fund buying. Benchmark copper for three-month delivery on the London Metal Exchange ended at $7,567.50 a tonne from $7,465 at the close on Friday and compared with a session high at $7,705.
"The numbers are pretty spectacular," said Alex Heath, head of base metals at RBC Capital Markets. "If China continues to buy at the rate it's doing, Europe and US consumers will be paying more than they bargained for." Unwrought copper imports from China, the world's largest metals consumer, jumped by more than a quarter in December, reaching 369,368 tonnes, customs data showed on Sunday. Expectations had been for imports of around 320,000 tonnes.
In addition, China's overall exports surged 17.7 percent year-on-year in December versus a forecast of 4.0 percent. "Chinese exports have also picked up, which suggests that the world economy is picking up as countries like the US buy manufactured goods from China," Citigroup analyst David Thurtell said.
On the downside however, fundamentals outside of China remain weak. LME copper stocks continue to rise, with the latest data showing inventories rose 4,575 tonnes to total 515,200 tonnes - their highest level since March. Also, Chile's state mining company Codelco told local media on Saturday that the firm's output should hit a record high this year.
Moreover, Chile's Mining Minister Santiago Gonzalez told Reuters on Monday global copper prices could see an "important" downward correction as high metal inventories continue to climb. Aluminium surged after the power operator in China's Henan province warned local smelters that its power supplies may fall due to power shortages. Aluminium ended at $2,330 versus $2,280.
LME stocks in the metal used in transport and packaging, fell 5,500 tonnes but remain near record levels above 4.6 million tonnes. On the plus side, recent rises in cancelled warrants - material earmarked for delivery out of warehouses - indicate demand might be picking up. On Friday, cancelled warrants were at 246,650 tonnes from 212,200 tonnes the previous day.
Bucking the trend, steel making ingredient nickel ended down slightly at $17,890 from $17,925 while battery material lead finished flat at $2,532. Nickel inventories climbed 810 tonnes to record levels at 159,792 tonnes, while mining giant Vale SA said it will restart its Sudbury, Ontario smelter by the end of January. Zinc ended at $2,573 a tonne from $2,521 and tin ended at $17,900 from $17,340. Tin, used in electrical solder, earlier hit $18,035, its highest level since September 2008. LME zinc stocks gained 575 tonnes to 491,325 tonnes to touch their highest level since October 2005.