Copper rebounded on Wednesday from the 6-1/2 year low it hit a day earlier after upbeat Chinese trade data helped soothe concerns about demand for metals in the world's second-biggest economy. China reported exports dipped just 1.4 percent in dollar terms in December compared with forecasts of an 8 percent drop. A 4 percent fall in imports was also much smaller than many had feared.
The country's copper trade data was even more positive. Copper imports in December rose 15.2 percent from the month before as low prices attracted buyers, and were down just 0.3 percent for the year from record levels in 2014. "China copper demand is better than the macro numbers have been suggesting but metals are trading on macro cues ... concern over Chinese equities, factory and industrial production numbers etc," said David Wilson, an analyst at Citi.
"On a 12-month view I'm relatively positive on copper because I think supply growth will be anaemic and China imports will be decent, but in the short term macro headwinds continue to challenge." Three-month copper on the London Metal Exchange closed up 0.8 percent at $4,390 a tonne, breaking a five-session losing streak. The contract is down nearly 7 percent this year, and prices plumbed their lowest level since May 2009 at $4,350 a tonne on Tuesday.
A move by China's central bank to halt the yuan's steep deterioration quelled some of the jitters in commodities. A weak yuan diminishes the buying power of Chinese metals importers. But metals could head lower in the near term as demand weakens ahead of the Chinese New Year and as worries about growth in China growth resurface, analysts said. "We will see more price weakness in 2016, but a bottoming-out process will likely take place during the second half of the year," said US-based analyst Ed Meir of financial services firm INTL FCStone, noting that low prices will eventually force producers to cut output.
INTL sees a 2016 low of $3,850 a tonne on copper, a high of $5,200 and an average price of about $4,600, Meir told the Reuters Global Base Metals Forum. In other metals, aluminium, the best performing LME metal this year, added 0.9 percent to reach $1,463 a tonne. Data showed China exported 430,000 tonnes of unwrought aluminium and aluminium products in December, down from November's 450,000 tonnes. News that China may stockpile aluminium is also helping support its price. Zinc climbed 1.8 percent to $1,494 a tonne, lead rose 1.3 percent to $1,627 and nickel added 2.1 percent to $8,390. Tin bucked the stronger trend, falling 0.7 percent to close at $13,350.