London copper slipped on Tuesday from a two-week high hit the session before after China boosted metal imports in January, as traders were worried about the sustainability of demand.
Positive economic data from China combined with policy initiatives that have buoyed its ailing housing market are set to underpin metals, Standard Chartered said in a note.
“Policy initiatives announced, including a reduction in property transaction taxes and increased funding for local government infrastructure projects, have had a positive effect on metals demand.’’
“We do not believe, however, that these economic developments alone will trigger a sustained rally in base metal prices.’’
China’s top leaders had pledged on Monday to keep economic growth within a reasonable range this year, after releasing a policy to limit the land available for homes in cities with property oversupply.
Three-month copper on the London Metal Exchange had fallen 1 per cent to $4,644 a tonne by 0706 GMT, giving back more than half of Monday’s gains when it topped out at $4,701 which was its strongest since February 4.
Shanghai Futures Exchange copper held its ground and was up 0.4 per cent at 36,200 yuan ($5,545) a tonne.
China’s imports of refined copper rose 7.8 per cent to 323,870 tonnes in January but much of this may be headed for storage, Standard Chartered said.
“Given the import arbitrage window remains firmly shut and the onshore copper price discount significant, we would anticipate further stock builds over the next few weeks.’’
Imports of refined nickel surged 338.2 per cent in January to 35,088 tonnes, year-on-year, while inflows of primary aluminium and refined zinc also rose, buoying prices on Monday before profit-taking set in on Tuesday.
ShFE tin rallied nearly 4 per cent to hit a six-month peak after news over supply shortages in Indonesia and a rise in China imports. Open interest in the contract, which launched nearly a year ago, has almost doubled since Friday.
Major Indonesian tin smelter PT Refined Bangka Tin (RBT) has stopped refining operations and its plant will be scrapped due to environmental concerns. Traders estimated it would cut around 10,000 tonnes from the market, about 3 per cent of global supply.
Oil prices dipped slightly after posting strong gains the previous session, tainting sentiment towards metals.
BHP Billiton slashed its interim dividend by 75 per cent on Tuesday as a collapse in prices for oil, iron ore and coal pushed it into the red.
BHP also said that most of its commodity markets were well supplied, while it expects its Australian Nickel West operations to be cash positive in the second half of fiscal 2016.