Copper steadied on Monday as investors awaited the outcome of a meeting of euro zone finance ministers to discuss Greek debt restructuring, while falls in copper stocks and record Chinese imports put a floor under prices.
Three-month copper on the London Metal Exchange eased 0.64 percent to $8,277.25 a tonne by 12:18 SA time, with volumes traded on LME Select at a wafer-thin 2,892 lots.
Copper touched a four-month high of $8,428.50 on Friday and has gained around 9 percent in the year to date.
Trade in Asia was extremely slow, with many markets including top consumer China closed for the Lunar New Year break, and the muted tone lingered into European trading hours.
“We think we'll see a quiet trading week for the metals, and we could see some profit-taking but I wouldn't be too worried about that,” said Daniel Briesemann, an analyst at Commerzbank.
“Investors are now net long for copper and for the first time in 18 weeks. Fundamental data for base metals are still very strong; we're going to get a huge supply deficit in copper this year,” he added.
Money managers, including hedge funds and other large speculators, switched to a net long position in copper during the week of January 17, reversing a long-standing bearish bet in the red metal in place since late September 2011,
US Commodity Futures Trading Commission (CFTC) figures showed.
The change in sentiment has helped copper withstand renewed concerns over Europe's debt crisis.
Euro zone finance ministers will decide later what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens after negotiators for private creditors said they could not improve their offer.
INVENTORIES
Fundamentals for copper remained strong. The latest data showed copper inventories in LME warehouses, which are seen as indicators of demand strength, fell by 2,975 tonnes to 345,775, their lowest point since early October 2009.
Also helping the metal used in power and construction, weekend data showed China's refined copper imports rose 18.3 percent in December from the previous month to a record high 406,937 tonnes.
But in China, copper inventories in warehouses overseen by the Shanghai Futures Exchange rose 9.3 percent, or 11,193 tonnes, to 131,645 tonnes last week, the highest since April 2011.
“Futures curves of industrial metals at the Shanghai Futures Exchange have fallen into contango. The price differential between Chinese prices and London prices has narrowed. This indicates that the Chinese market is now adequately supplied,” said Credit Suisse in a note.
“How much of this is due to simple re-stocking ahead of the Chinese New Year and how much is because of weaker demand remains to be seen. The concern is that most of this might be due to demand weakness.”
In other metals traded, soldering metal tin, the best performing LME metal this month, rose 0.87 percent to $21,970 a tonne from $21,850, while zinc, used in galvanising, rose 0.75 percent to $2,027 from $2,012.
Battery material lead rose 0.60 percent to $2,197 a tonne from $2,184, while aluminium rose 0.05 percent to $2,216 from $2,215, and
stainless-steel ingredient nickel rose 0.87 percent to $20,628 from $20,450. - Reuters