"We had a very strong period at the back end of last year (and) in 2018 we still have supply side growth (in copper) with new mining projects coming online," said Bernstein analyst Paul Gait, adding however, that he still expected copper to be "pushing higher over the course of 2018".
Copper speculators raised their net "long" or buy positions by 13,604 contracts to 113,124 contracts in the week to January 2. In zinc, the cash contract on the London Metal Exchange (LME) traded at a $26 premium to the three month benchmark, up from a $10 discount on December 12, the latest indicator of supply tightness in the metal used to galvanise steel.
LME copper ended up 0.1 percent at $7,125 a tonne, having hit its lowest in two weeks at $7,105. Prices on December 28 topped out at $7,312.50 a tonne, the highest since January, 2014. Aluminium closed down 1.3 percent at $2,175, having hit its lowest in nearly two weeks at $2,171 with Shanghai Futures Exchange stockpiles at record highs, up some 660 percent since the start of last year.
"Aluminium has lost around 3 percent (this year) as the market does not show any signs of tightening despite two months of heating season capacity cuts in northern China. Inventories continued to build in recent weeks," said Julius Baer in a note. "We believe aluminium should remain well supplied (and) stick to our cautious view on aluminium and industrial metals. Without sounding too pessimistic about global growth, the likelihood of a slowdown is bigger than that of an acceleration."
As China tightens restrictions on imports of foreign waste, Chinese metal recyclers and even smelters like Jiangxi Copper Co are increasingly looking to use Southeast Asian as an alternative location for processing copper scrap. Zinc closed up 1 percent at $3,386, having hit its highest since 2007 at $3,390 as concerns over dwindling stockpiles and a market deficit persist.
Chinese steel futures swung to gains in late trading on Monday after the industry ministry issued new guidelines restricting the replacement of obsolete steel mill capacity. A large "short" or sell position holder has emerged in lead futures, at 20-29 percent of outstanding positions for February, and 30-39 percent for March. Data also showed one entity holds 40-50 percent of lead "warrants" or ownership titles. Lead closed up 2.5 percent at $2,604, tin closed up 0.1 percent at $20,000 while nickel closed flat at $12,530.