Copper was largely steady on Tuesday after rallying more than 2 percent in the previous session, as worries about slowing demand growth from China tempered hopes of further monetary easing in the United States.
Copper rose by the most in more than two weeks on Monday as the dollar weakened after Federal Reserve Chairman Ben Bernanke said ultra-loose monetary policy was still needed to reduce unemployment even though the U.S. economy has shown signs of improvement.
The Feb chairman’s comments helped boost other commodities, including oil.
But the rally appeared short-lived as investors focused on the slowing economy of China, the world’s largest copper consumer. Three-month copper on the London Metal Exchange traded largely unchanged at $8,529 a tonne by 0306 GMT.
“Bernanke’s comments were supportive for a lot of the commodities. Copper has stayed in a very tight range,” said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
“Technically in this consolidation, prices have been very well supported on any dip. Based on the charts, I think the market is looking to break higher,” he added.
Copper has been building on an advance since it hit a two-week trough of $8,262.50 a tonne last week, on fears of a growth slowdown in China.
Prices are up by more than 12 percent this year, but have so far failed to break above the $8,800 level.
The most-traded June copper contract on the Shanghai Futures Exchange climbed 0.86 percent to 60,700 yuan ($9,600)a tonne.
Bearish U.S. housing data was also weighing on copper. Contracts to purchase previously owned U.S. homes unexpectedly fell in February, suggesting a further pull back in sales as the housing market struggles to regain its footing.
Technical analysis, however, shows LME copper is biased to rise to $9,404 per tonne over the next three months, as indicated by its wave pattern and a triangle.
In other metals, Chinese demand for zinc and lead from the galvanised steel and battery sector is slowly but surely picking up, said Angela Bi of Macquarie in Shanghai.
China is the world’s top metals consumer. “Galvanised steel producers have been restocking since the end of February so we see some fundamental support for zinc. The short term downside risk to zinc is still limited, but I don’t see much momentum to push the price above the marginal cost level because there is still huge inventory,” she added.
Bi said zinc marginal costs stand around 15,000 yuan per tonne. ShFE June zinc futures traded at 15,590, up 0.65 percent at 0306 GMT.
“For lead, the fundamentals are much better. Smaller lead acid battery plants have ramped up production since the end of February. Automakers have also raised production 10-15 percent in March, at the same time bike production is also recovering from the Chinese New Year period,” she added.