Three-month copper on the London Metal Exchange closed at $8,103 a tonne, trimming gains from the previous session when it hit its highest since October 19 at $8,159 a tonne. It closed at $8,140 on Monday. Copper prices have risen more than 7 percent since mid November. "I think what we're seeing is new activity coming into the base metals from the long side. I don't think it's being done on the basis of fundamentals, it's much more technical in nature," said Barclays analyst Gayle Berry.
"Fundamentally the feedback from China is still pretty soft. Everything apart from tin is in a surplus, stocks for most metals are rising, and there's not really much indication of any significant improvement in Chinese demand." China's copper imports rose 13.5 percent in November from the previous month. But the latest figures were boosted by the arrival of delayed shipments after a week-long holiday in October and overall demand for the metal remains weak. Imports had dropped 18.5 percent month-on-month in October because of the National Day holiday.
China's production of refined copper rose in November to a record high for the second straight month, which would also tend to dampen prices. China accounts for around 40 percent of global refined copper demand. "The rise is quite puzzling given that demand has yet to return to its former level, while end users also have the option of tapping into large local stockpiles that surely must be competitively priced," INTL FC Stone said in a note.
However, China's economy, the world's second largest, may be on a bumpy road to recovery. Economic data over the weekend showed factory output and retail sales rose at their fastest pace in eight months in November, fuelling hopes that the country is snapping out of a seven-quarter-long slide. Three-month tin fell on Tuesday after a 6 percent surge on Monday that was driven by a 28 percent fall in shipments of refined tin from Indonesia, the world's top exporter, in November from the previous month.
"We would expect tin prices to be fairly choppy over the next few days as long-term, technical funds buy dips and trade/macro players look to sell any rally," RBC said in a research note. Three-month tin closed at $22,970 per tonne from a last bid of $23,090 on Monday. Battery material lead closed at $2,297 versus $2,298, within reach of a 2012 peak of $2,329 a tonne. Inventories of the metal in warehouses monitored by the LME fell 2,025 tonnes to 352,900 tonnes, the lowest in about a month. Three-month aluminium closed at $2,116 per tonne from a last bid of $2,131, zinc at $2,080 from $2,085 a nd nickel at $17,800 from $17,775.