Copper held steady on Tuesday near a one-month peak as the dollar fell and on steady buying from China, although investors remain concerned about forecasts of a supply glut. Local media in China reported that the government is looking to increase investment in railway projects as it aims to ensure annual economic growth does not sink below 7 percent.
The report helped push world shares towards five-year highs, and lifted copper near the one-month peak. Euro zone consumer morale hitting a nearly two-year high in July also helped market sentiment. Three-month copper on the London Metal Exchange, untraded at the close, was bid at $7,039 a tonne from $7,029 at the close on Monday. Copper on Monday reached its highest level since June 18 at $7,053 a tonne.
"There's still some downside to go with copper. You always get these brief lifts when China announces stimulus, but they generally are quite short-lived because fundamentals are not in favour of higher copper prices," said Sucden analyst Kashaan Kamal. Data out Monday showed China's refined copper imports rose 11.04 percent in June from a year earlier. Also lifting sentiment, China's central bank announced on Friday that banks could lend at any rate they wanted.
China consumes around 40 percent of the world's copper. Economic growth in the country slowed to 7.5 percent in the second quarter, from 7.7 percent in the first quarter, and investors fear it will slip further still this year. Also, analysts continue to bump up their surplus supply forecasts for this year and next.
In industry news, Wall Street's multibillion-dollar commodity trading operations will be put under the political spotlight on Tuesday as a powerful US Senate committee questions whether commercial banks should control oil pipelines, power plants and metals warehouses. The global lead market was in deficit by 37,000 tonnes in the first five months of the year, a monthly bulletin from Lisbon-based International Lead and Zinc Study Group (ILZSG) showed.
The global zinc market was in surplus by 38,000 tonnes, it said. Zinc closed at $1,887 a tonne from $1,877, while lead closed at $2,055.5 per tonne from $2,053.5, tin at $19,455 a tonne from $19,450 and nickel at $14,130 a tonne from $14,070. Aluminium, untraded at the close, was last bid at $1,845 a tonne from $1,848.