Copper prices steadied on Tuesday as optimism about demand for industrial metals from top consumer China and shrinking supplies at warehouses offset selling by some traders who cashed in following recent gains.
Benchmark London Metal Exchange (LME) coppertraded at $7,102 a tonne in official rings, down 0.3 percent, before steadying at $7,122.75 a tonne at 1222 GMT as it bounced off two-week lows of $7,078.25 hit earlier in the session.
Investors will focus on gross domestic product data from China due on Wednesday. Analysts polled by Reuters expect that the economy probably steadied in the second quarter with annual growth holding firm at 7.4 percent, suggesting a recovery is taking hold.
"It is clear that credit conditions in China are beginning to ease, and this has been supportive for base metals," said Nic Brown, head of commodities research at Natixis.
"There is a positive confirmation of what we knew already, that stimulus measures are feeding through to the economy."
The metal used in power and construction had jumped 9 percent from June lows to hit a four-and-a-half month peak of $7,212 a tonne on July 8 but has failed to build on the gains, despite generally improving economic sentiment.
Traders said the failure to break any higher indicated a chart-based signal to sell.
"Technical and speculative selling is getting more confident with lack of upside follow through," said a trader in Hong Kong. The trader sees support at $7,080, $7,045, and $6,900.
Helping underpin prices were signs of tight physical stocks. Copper inventory levels in LME-registered warehouses, at 159,375 tonnes, were around their lowest in nearly six years.
But in a move that has spooked markets, LME warehouses in Asia have registered a flurry of small deliveries this month, sparking a reminder of a copper surplus that is expected to feed into the market in the second half.
Aluminium stocksalso registered a downtrend, falling by 9,100 tonnes to a 22-month low below 5 million tonnes. Analysts said, however, that vast amounts of aluminium were held in financing deals and not available to the market.
"(Aluminium) stocks have been reduced by 8.5 percent since the start of the year, partly on account of cancelled warrants. Nonetheless, cancelled warrants remain close to a record level at 2.93 million tonnes," Commerzbank analysts said in a note.
"In other words, a large proportion of the stocks is still not available to the market."
Reflecting a tightening market, the discount for cash aluminium to three-month prices narrowed to $20.07, its narrowest since late 2012.
Aluminiumtraded up 0.2 percent at $1,946 a tonne.
"We are moving from a chronic global surplus (in aluminium) to a modest deficit," Brown said.
In industry news, miners PanAustand OZ Minerals said full-year copper production was expected to be at the upper end of their guidance range.
Zinctraded 0.5 percent lower at $2,295.50 a tonne, while tin traded at $22,150, lead was down 0.7 percent at $2,198 a tonne and nickel traded down 0.1 percent at $19,325 a tonne.
Source: Reuters
Benchmark London Metal Exchange (LME) copper
Investors will focus on gross domestic product data from China due on Wednesday. Analysts polled by Reuters expect that the economy probably steadied in the second quarter with annual growth holding firm at 7.4 percent, suggesting a recovery is taking hold.
"It is clear that credit conditions in China are beginning to ease, and this has been supportive for base metals," said Nic Brown, head of commodities research at Natixis.
"There is a positive confirmation of what we knew already, that stimulus measures are feeding through to the economy."
The metal used in power and construction had jumped 9 percent from June lows to hit a four-and-a-half month peak of $7,212 a tonne on July 8 but has failed to build on the gains, despite generally improving economic sentiment.
Traders said the failure to break any higher indicated a chart-based signal to sell.
"Technical and speculative selling is getting more confident with lack of upside follow through," said a trader in Hong Kong. The trader sees support at $7,080, $7,045, and $6,900.
Helping underpin prices were signs of tight physical stocks. Copper inventory levels in LME-registered warehouses, at 159,375 tonnes, were around their lowest in nearly six years.
But in a move that has spooked markets, LME warehouses in Asia have registered a flurry of small deliveries this month, sparking a reminder of a copper surplus that is expected to feed into the market in the second half.
Aluminium stocks
"(Aluminium) stocks have been reduced by 8.5 percent since the start of the year, partly on account of cancelled warrants. Nonetheless, cancelled warrants remain close to a record level at 2.93 million tonnes," Commerzbank analysts said in a note.
"In other words, a large proportion of the stocks is still not available to the market."
Reflecting a tightening market, the discount for cash aluminium to three-month prices narrowed to $20.07, its narrowest since late 2012.
Aluminium
"We are moving from a chronic global surplus (in aluminium) to a modest deficit," Brown said.
In industry news, miners PanAust
Zinc
