Copper hit its highest price in almost two months on Monday as investors took heart from rising factory output growth in top consumer China, though the data also showed Chinese exports and imports came in below forecasts, tempering gains.
Also casting a pall over copper was Italian Prime Minister Mario Monti's surprise decision to resign early, raising political risk in a country that is still a central focus of the euro zone debt crisis.
Three-month copper on the London Metal Exchange CMCU3 rose 1.24 percent to $8,135 a tonne by 12:14 SA time, extending a small
gain from the previous session, when it logged a fourth week of gains in a row. Prices earlier hit $8,148 a tonne, the highest since October 19.
“Copper has been catching up with other commodities over the past few weeks, thanks to some improvement in the Chinese economy, but we'd have doubts whether we can go further from here because the improvements have not been that impressive,” said Credit Suisse commodities analyst Stefan Graber.
“Looking at inventories and the supply side in general, we don't see an immediate risk of supplies getting tight.”
China data at the weekend showed both industrial output and retail sales rose in November at their fastest annual pace in eight months, China's exports growth slowed sharply to a much lower than expected 2.9 percent in November.
The weak export numbers will drag on the revival in the Chinese economy as its major buyers struggle; Europe and Japan with recession and the United States with a sluggish recovery.
Recent US data, however, has shown improvement in key sectors like housing and jobs, while investors think a resolution is likely for the US “fiscal cliff”, a combination of government spending cuts and tax rises that could tip the US back into recession.
China's copper demand remains soft amid expectations it will export more metal next year, after exporting a monthly average of 23,000 tonnes so far this year, Barclays Capital said.
“We believe exports will become more regular, perhaps averaging 10,000 to 15,000 per month. Such a development is likely to weigh on LME prices,” it said in a note.
China's copper smelters stepped up refined copper exports following a tax adjustment over summer that reduced their costs to export and made such trades more attractive.
Also a drag for copper, China's copper imports rose 13.5 percent in November from the previous month, but the figure was boosted by the arrival of delayed shipments after a week long holiday, meaning overall demand remained weak.
“This week has seen further incremental Chinese data improve, but concerns remain over the potential for a copper surplus in 2013 and the ability of miners to balance growth and shareholder return in the current environment,” said Macquarie analysts in a note.
In other metals traded, soldering metal tin rose 2 percent to a two month high of $22,225 a tonne, while zinc, used in galvanising rose 2 percent to $2,070 a tonne, having hit a two month high earlier of $2,074.75 a tonne.
Battery material lead rose 2.25 percent to $2,264.75, having hit a two-month high of $2,272.50 a tonne earlier; aluminium rose 0.8 percent to $2,105.50 a tonne, while stainless-steel ingredient nickel rose 1.31 percent to $17,451 a tonne. - Reuters