Copper fell on Monday, retreating from last week's rally due to weakness in US data and Chinese imports and as concerns about Japan's nuclear crisis eclipsed longer-term prospects for metals demand there. Three-month copper on the London Metal Exchange closed at $9,405 a tonne, from Friday's close of $9,510.
China's February imports of refined copper hit a 27-month low due to high stocks of the metal used in construction and power and holidays in the year's shortest month. The metal was on track for its biggest two-day fall since March 10. It dropped after gaining more than 3 percent last week to close out its best week since early February, having risen to above $9,611 on Friday from Tuesday's low below $9,000.
Hitting sentiment, data on Monday showed sales of previously owned US homes fell unexpectedly sharply in February and prices hit their lowest in nearly nine years. Investors remained focused on Japan where the government, which has been juggling relief work with a race to avert catastrophe at a crippled nuclear plant, has yet to estimate the damage or say how much it may spend on reconstruction.
Economists are certain the cost will exceed that of a 1995 quake in Kobe, estimated at $100 billion, and base metals will be crucial to rebuilding efforts. "People are waiting to figure out what will happen with Japan," Smith added. "It's going to be pretty volatile for the next week or two as people digest everything that's going on."
The markets were also closely following unrest in the Middle East and in Libya, where UN-mandated air strikes spurred US crude oil futures up about 1 percent to around $115 a barrel. Aluminium rose to a session high of $2,604 a tonne before trimming gains to close at $2,570, from $2,560 on Friday.
Pressuring prices, International Aluminium Institute data showed China bumped up its production of primary aluminium to a record high daily average of about 116,200 tonnes in February, from a revised 110,300 tonnes in January. Copper stocks continued to build, rising 850 tonnes, with most of the deliveries flowing into Singapore and Gwangyang warehouses, underlining physical market weakness in the Asian region.
Apparent demand for refined copper in top base metals buyer China fell 12.5 percent in February as imports slowed and stockpiles held at the Shanghai Futures exchange grew, Reuters calculations based on the official Chinese data showed on Monday. "There is a bit of a bullish and bearish struggle going on," Christin Tuxen, an analyst at Danske Bank, said.
China's Vice Premier Li Keqiang said on Sunday the nation would stay focused on stifling inflation even as global economic uncertainties multiplied. That came after Friday's move by China to raise bank reserve ratio rules once more as part of Beijing's effort to tame price rises. Zinc, used in galvanising, closed at $2,280 a tonne from Friday's $2,325 close, and lead was at $2,645 a tonne from a last bid of $2,675. Tin, untraded at the close, was bid at $29,650 from a close of $29,400 a tonne and nickel closed at $26,750 a tonne from $26,750.