Shanghai Futures Exchange copper climbed 1.4 percent to 46,110 yuan ($6,658) a tonne on Tuesday, underpinned by a weaker dollar and after solid inflation figures shored up sentiment in China, while planned plant closures there supported Shanghai zinc and lead prices. ShFE zinc ended up 5.1 percent and lead gained 3.9 percent.
China's producer prices surged the most in more than five years in December as prices of coal and other raw materials soared, adding to expectations that global inflation may be stronger in 2017. The pick-up in prices reinforces views that the world's second-largest economy is on steadier footing heading into the new year, underpinned by stronger factory activity and domestic demand which is being driven by a lending and construction boom.
But metals trading is expected to stay cautious and copper largely in range until next month as traders stay cautious ahead of the inauguration of US President-elect Donald Trump and possible profit-taking in China before the Lunar New Year. "I do think there is still a lot of uncertainty around the Trump impact and what that will mean for the dollar in the short- to medium-term, and that is keeping things a little bit cautious in the metals market," said ANZ strategist Daniel Hynes in Sydney.
Chinese zinc and lead producer Yunnan Chihong said on Thursday it planned to shut down several plants and take impairments on others hit by high operating costs and low profitability and that did not conform with China's supply-side reforms. Processing fees for China's zinc smelters reached record lows last month.