KUALA LUMPUR/SHANGHAI: London copper was steady on Wednesday, after rallying more than 3 percent in the previous session, as Chinese consumers held back purchases ahead of the Lunar New Year holidays.
Prices were boosted on Tuesday on record imports from top consumer China in December that brightened the demand outlook for industrial metals.
Three-month copper on the London Metal Exchange was little changed at $7,745 a tonne by 0709 GMT. Copper shed a fifth of its value last year, the first annual decline in three years.
The most-traded March copper contract on the Shanghai Futures Exchange gained 1.8 percent to 56,860 yuan ($9,000) a tonne.
Imports of copper by China, which accounts for 40 percent of the refined metal's global consumption, rose 12.6 percent to record levels of 508,942 tonnes in December, according to customs data.
The subsequent price rally has deterred Chinese buyers, said Nick Trevethan, senior commodities strategist, at ANZ Research in Singapore.
"The Chinese have been happy buyers between $7,450 and $7,650. The price spike up has dampened their buying enthusiasm. They probably don't need that much copper right now moving into the end of the year, so they're holding tight," he said.
China's offices and exchanges will be shut in the last week of January because of the Lunar New Year holidays, traditionally a weak period for copper consumption.
A firmer dollar is also weighing on metals. A stronger US currency makes dollar-based commodities expensive for holders of other currencies.
The euro fell against the dollar on Wednesday and floundered near a record low versus the Australian dollar in cautious trade a day ahead of a European Central Bank policy meeting and debt sales from Spain.
Later on Wednesday, German Chancellor Angela Merkel and Italian Prime Minister Mario Monti meet to discuss the euro zone crisis, while German annual gross domestic product data will be released, with 3 percent growth forecast in 2011.
Spot demand for copper and aluminium was also weak, with front-dated futures prices on the Shanghai Futures Exchange slipping into discount against three-month prices from a premium in December.
"In February, near-term consumption will go up and people will get physical metal from the exchange or the bonded market, so the bonded premium will improve and support prices," said a trader.
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