Copper prices firmed on Monday but may see renewed weakness on worries over the economic recovery as a stronger US dollar weighs on market sentiment. The dollar held steady on Monday, retaining its gains of late last week when growing worries about the global economy prompted investors to park funds in the world's most liquid currency, while the Australian dollar slid on political uncertainty.
"Chances are small to break the range-trade pattern," said Yang Jun, an analyst at China Futures Co. "There is not much room for a big rally due to lack of promising demand prospects in the rest of the year on slower manufacturing activities, in addition to potential strength in the dollar."
Shanghai's benchmark third-month copper futures contract rose 0.25 percent to 57,190 yuan a tonne. The arbitrage window between Shanghai and LME remained closed, with LME copper at a 674-yuan premium over Shanghai. Weak arbitrage buying from the LME to Shanghai has cut into premiums of spot refined copper imports into China and encouraged buyers to resell part of booked metal to Japan and South Korea, traders said.
Daily average primary aluminium output fell to 66,300 tonnes in July from 66,600 tonnes in June, mainly due to drops in China's aluminium production, provisional figures from the International Aluminium Institute (IAI) showed.