Copper hit its highest since late March on Tuesday after Chinese inflation data suggested Beijing would sustain an accommodative monetary policy, underpinning a steady but modest seasonal recovery in metal demand. Three-month copper on the London Metal Exchange rose to $7,638 a tonne, its highest since March 28, before closing slightly lower at $7,625 a tonne.
China’s annual consumer inflation eased to 2.1 percent in March from February’s 3.2 percent, data showed, below market forecasts and leaving policymakers room to keep monetary conditions loose to support a burgeoning economic recovery.
Its annual rate of economic growth also is likely to have sped up slightly in the first three months of 2013 versus the last quarter of 2012, according to a Reuters poll.
“The data is moving in the way that the market is expecting after a bit of a slow start to the year. The restocking phase is expected to come through … we should be seeing more physical interest than we have in the past few days – particularly on Shanghai,” Societe Generale analyst Robin Bhar said.
“This should shore up sentiment, despite the fact that some of the US data has been a bit weak,” he added, referring to last week’s US non-farm payroll figures.
Copper is attempting to recover more broadly from eight-month lows of $7,331.25 a tonne last week but is still down by more than 5 percent this year.
“We expect copper prices to average $7,500 for the second quarter,” said analyst Matthew Fusarelli at Sydney-based consultancy AME. “The market is changing structurally. We expect a surplus of 300,000 tonnes this year. We don’t expect prices to return to where they were at the start of the year,” he added.
LME copper prices reached a peak above $8,300 a tonne in early February, but that was still down by nearly a fifth from a record high of above $10,000 a tonne in 2011.
In industry news, unionised workers at Chilean state miner Codelco began a 24-hour work stoppage early Tuesday at all units of the world’s top copper miner to demand greater job security, labour leaders said earlier in the day.
Codelco expects to resume normal operations on Wednesday.
“Certainly the markets seem to be taking the strike news in stride. Although copper is higher right now, it basically is just about where it was at this time yesterday,” said Ed Meir, analyst at INTL FCStone.
In other news, global miner Anglo American should produce 3 percent more copper this year, or around 680,000 tonnes, in part as the promising but troubled Collahuasi mine turns the corner after a tough 2012, the company’s head of copper said.
Aluminium ended at $1,919 a close of $1,890 on Monday, having earlier hit its highest since March 28 at $1,914
Zinc, untraded at the close, was bid at $1,920, up from a last bid of $1,892 on Monday, with stocks data released earlier showing that LME inventories had dropped 7,125 tonnes. It earlier hit its highest level since March 26 at $1,923.
Lead ended at $2,090 from $2,058 and nickel ended at $16,200 from a close of $16,050 on Monday. Tin ended at $22,970 from a close of $22,925 on Monday.
