Copper prices were steady on Tuesday, supported by falling inventories and output cuts, but persistent concerns about demand growth in top consumer China kept a lid on the market. Benchmark copper on the London Metal Exchange closed up 0.1 percent at $5,185 a tonne.
Prices were supported by a drawdown in inventories, as stocks of copper in LME-approved warehouses fell to 312,225, down more than 15 percent from a peak in late August. Bonded stocks in Chinese warehouses are estimated to have fallen about 350,000 tonnes over the past three months. "The market is starting to look at the fact that warrant (inventory) levels are falling quite rapidly and you have more production reduction announcements," said David Wilson, analyst at Citi. "Is this a market you really want to be shorting?"
Copper prices have rebounded from six-year lows below $5,000 touched in August, helped by planned output cuts by several mining groups, including Glencore. The industry giant said last month it would suspend some copper production operations at its Katanga Mining unit in Democratic Republic of Congo and Mopani Copper Mines in Zambia for 18 months, removing 400,000 tonnes of cathode from the market.
But persistent concerns about slowing demand growth in China resurfaced on Tuesday, capping gains. The Chinese economic slowdown was highlighted by an unexpected drop in German industrial orders in August. China and other emerging economies are major export markets for Germany. "People are worried about the outlook in China and, increasingly, in other emerging markets," said Stephen Briggs, analyst at BNP Paribas. China accounts for nearly half of global copper consumption, which is estimated this year at around 23 million tonnes. Traders reported subdued volumes due to National Day holidays in China.
Lead rose 0.2 percent to $1,628.5 a tonne, after touching a five-year low of $1,608 earlier in the day. The battery metal has been pressured by falling demand from e-bike manufacturers and growing use of recycled material in China. Zinc slid 0.7 percent to $1,655, tin gained 1 percent to $15,750 and nickel rose 0.1 percent to $9,960 per tonne. Three-month aluminium closed down 0.7 percent at $1,554 a tonne.