London - Copper rose on Tuesday as a pledge by top consumer China to maintain economic growth at 7.5 percent boosted the outlook for demand, with added support from expectations of accommodative monetary policy around the world.
Three-month copper on the London Metal Exchange rose to $7,774.25 a tonne at 12:36 SA time, up 0.6 percent from a close of $7,725 a tonne on Monday.
Last week prices hit their lowest level in more than three months at $7,652 a tonne.
China aims to expand its economy by 7.5 percent in 2013 and keep consumer inflation running around 3.5 percent for the year, outgoing Premier Wen Jiabao said on Tuesday at the start of annual parliament meetings.
Demand from China, which accounts for 40 percent of global copper consumption, slowed last month ahead of the week-long Lunar New Year holiday, but expectations of a rebound have gathered pace ahead of the seasonally stronger second quarter.
“Over the short term we're likely to see prices at around current levels for the next few months. You do have some continuation in the Chinese recovery story and that will help to support prices,” said Ross Strachan, an economist at Capital Economics.
“But in the second half we think that the recovery (in China) will be more disappointing than some have anticipated. We're expecting prices of around $7,000 for copper by the end of the year.”
Helping to boost sentiment were expectations that central banks' monetary policy will remain accommodative when the European Central Bank, Bank of Japan and Bank of England hold policy meetings later this week.
Comments from a US Federal Reserve official on Monday backing the current aggressive monetary stimulus and a decision by Australia's Reserve Bank to keep its interest rates at record lows have bolstered hopes these policies will remain in place.
Copper shed more than 4 percent in February and is trading 2 percent lower for the year to date.
“It (copper) has got itself a bit oversold in the short term, and hence I would not be surprised to see a sharp corrective bounce in the coming days,” independent technical analyst Cliff Green said.
“Resistance now waits at initially 7,850, which if broken could extend gains closer to the technically more important 7,940 region,” he said in a Q&A session in the Reuters Global Base Metals forum.
SEASONAL DEMAND
Chinese consumers are coming back into the market since the Lunar New Year, and orders are expected to steadily improve in coming weeks, traders said.
“There was some Chinese pricing today (Monday) on the official ring, which saw the cash price rise sharply, but the underlying sentiment remains soft,” broker Triland said in a note after the official market close.
Looking ahead, concerns about a slowdown in US growth after automatic government spending cuts kicked in on March 1 could push copper prices lower in coming weeks and hurt growth in the second quarter, BofA Merrill Lynch said in a note to clients.
In other metals, soldering material tin rose to $23,406 from Monday's close of $23,375, while zinc, used in galvanising, climbed to
$2,013.50 from $2,002.
Battery material lead rose to $2,225 from $2,216, aluminium was at $1,989.50 from $1,974 and stainless-steel ingredient nickel
climbed to $16,570 from $16,450. - Reuters