MELBOURNE: London copper and nickel dipped on Tuesday as the dollar edged higher, but encouraging economic signals from China offered some support to prices.
A real estate boom and stronger than expected factory activity over summer has brightened the outlook for metals, with copper also finding support from earlier than expected consumer restocking.
"With summer coming to a close, copper demand conditions in China have improved markedly," JP Morgan said in a report.
"Orders for low voltage copper cables used in real estate construction have increased and production at major copper wire rod companies has stabilized."
JP Morgan sees China's copper imports increasing, its exports decreasing and its bonded stocks falling.
While this should help to tighten surplus outside of China, JP Morgan has retained its short December copper trade recommendation.
Three-month copper on the London Metal Exchange slipped by half a percent $4,752 a tonne by 0207 GMT, following a small loss in the previous session. Prices have marked out a floor around $4,700 and are within reach of fresh highs above $4,794.50, a three-week top hit last week.
LME nickel also saw modest profit-taking after prices surged by 4.4 percent, the biggest daily gain since July on prospects that more Philippine mines may be suspended when the results of an environmental audit are announced this week. Prices slipped 0.3 percent to $10,115 a tonne.
"While the miners there are complaining of anti-mining activists being involved in the government efforts, it seems like this push will finally force the dirty miners to tighten their controls and update their facilities or face permanent closure," said Triland in a note.
"Until Friday, nickel had been looking weak/neutral on the charts. Today's move suggests more gains are likely in the short term but we can't talk about a resumption of the uptrend just yet."
China has boosted its imports of nickel ore, with stockpiles at ports standing at more than 1.5 million tonnes and the highest since last October.
Shanghai Futures Exchange copper traded up 0.3 percent at 37,210 yuan ($5,579), while zinc was up 2 percent. Aluminium, lead and nickel all rose more than 1 percent as markets resumed following a long autumn break.
China's refined zinc output has fallen 1 percent year on year to 4.1 million tonnes, Standard Chartered noted as smelters face lower processing fees, suggesting they will have to import more refined metal.
"Ongoing constraint in China's refined output is a clear signal of tightness in the concentrate market."
"Zinc prices should resume upward momentum once refined import volumes rebound from current depressed levels."
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