Copper and other base metals rose on Tuesday after China reported that its economy had not slowed as much as many had feared and metals investors began to reassess whether the steep losses over the past year are justified. China reported growth of 7.3 percent for 2014, just pipping forecasts of 7.2 percent, with retail sales and industrial production numbers also both running ahead of predictions in December.
While the 2014 growth number was the slowest since 1990, GDP is now 10 times as large as it was then. The figure was also low enough to keep pressure on policymakers to head off a sharper downturn. Still, copper was held back by expectations of growing supply, underscored by gains in London Metal Exchange stocks shown by latest figures to be up by a fifth this year.
"People are seeing an apparent surplus for copper this year but ... its overbaked. What we're likely to see in a time of weak prices is China using that weakness to accumulate copper," Bernstein analyst Paul Gait said. Three-month copper on the LME finished the day 0.3 percent higher at $5,690 a tonne, having touched 5-1/2 year lows of $5,353.25 last week.
Weighing on the metal was further weakness in oil, this time prompted by the International Monetary Fund cutting its 2015 global growth forecast 0.3 percentage points to 3.5 percent. But offering copper support was news that Freeport-McMoRan Inc could lose its permit to export copper concentrate from its massive Indonesian mine unless it can show progress in developing a new copper smelter.
In other metals, lead rose 2.5 percent to a one-month high of $1,904 a tonne, still benefiting from expectations of lower supplies after Invernia Inc said on Friday that it would suspend operations at its Paroo Station Mine in Western Australia. Jefferies metals strategist Gayle Berry said that if the mine remained closed for the whole year, it would wipe out their forecast surplus of 31,000 tonnes of refined metal for 2015. "When combined with market positioning that is short ... we see potential for a short-covering bounce in lead prices," she said in a note.
"We would caution, however, that with industry inventories at comfortable levels, any rally will face limited upside, but at the very least we think lead prices are carving out a bottom." Aluminium was up 1.4 percent at $1,844 a tonne by the close, zinc gained 1.1 percent to $2,100, tin added 0.7 percent to $19,450 and nickel ended 2.1 percent firmer at $14,780.