SINGAPORE: London copper steadied on Tuesday above four-month lows hit in the previous session but investors stayed on the sidelines, wary about the controversial bailout plan for Cyprus, while Chinese consumers showed limited interest in placing orders.
Markets have been waiting for top copper consumer China to return after February's Lunar New Year and its leadership transition, especially as the seasonally strongest second quarter gets underway. But even with prices near their lowest of the year, consumers seem content to nibble, traders said.
Three-month copper on the London Metal Exchange rose 0.34 percent to $7,601.75 a tonne by 0238 GMT, paring losses from the previous session when it fell more than two percent to $7,545.75 a tonne, its lowest since Nov. 9.
The most-traded July copper contract on the Shanghai Futures Exchange was flat at 55,280 yuan ($8,900) a tonne, finding its feet from seven-month lows.
LME aluminium, lead and zinc also remained mired close to four-month lows.
"We expect the Cyprus situation to be contained, with no further spillover, but technically and from what we see in terms of inventory dynamics, there is absolutely no reason to get immediately bullish" said Singapore-based analyst Dominic Schnider at UBS.
"We still expect in the seasonally stronger second quarter that we should see some recovery (in China demand) kicking in. But at the moment, that seems to be more wishful thinking," he added.
The euro licked wounds near three-month lows versus the dollar on Tuesday after a plan to tax bank accounts in Cyprus to help pay for the country's bailout stoked worries about financial stability in the euro zone.
Euro zone ministers have urged Cyprus to let smaller savers escape a levy on bank deposits, before a parliamentary vote on Tuesday that will either secure the island's financial rescue or threaten default.
Also muting buying interest are China's domestic copper stockpiles that have only recently turned down from near record levels.
"The second quarter is the peak season and people tend to restock. Yesterday was a good opportunity for our clients to price,"
Monday's steep price fall presented a chance for buyers to check prices, but they were still reluctant to commit, said a Hong Kong based trader.
"Recently we've seen downstream buying and restocking is improving, especially for the air conditioning sector and some white goods," he said, adding however that orders from the cable sector appear to be weaker than this time last year.
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