Copper turned positive on Tuesday as the dollar pared gains after US data showed the country's trade gap widened sharply in May, reflecting high imports and signalling resurgent demand. "I think that's what it's down to," Nicholas Riley, Marex Financial's head of LME sales said of copper's reverse from the morning's lows.
"And there's a bit of technical buying, we've been monitoring over the last couple of hours. I think the rally that we saw at the end of last week...a few people managed to take advantage and get some good sales and those same guys (are) covering back." Three-month copper on the London Metal Exchange finished at $9,651 a tonne, up 0.81 percent from a close of $9,570 on Monday, though still more than 5 percent off a record high $10,190 hit in February.
European Union leaders are poised to hold an emergency summit after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain, and investors dumped the euro and European shares. Copper had risen around 8 percent in the two weeks to the end of last week.
"European debt, China concerns, bad US data, USD strength, flight to quality. Whatever reason you want to give, they have all added up to give metals a bad name this morning," RBC Base Metals said in a research note. While these concerns may lead to a temporary period of profit taking among cyclical metals, metals-specific demand indications offered further signs on strength, Credit Suisse said in a research note.
The bank pointed to China trade data, which showed a 9.9 percent rise to 280,000 tonnes in copper imports in June, snapping two months of falls. Strikes have also focussed attention on already tight supplies of the metal, helping to underpin the price.
Although Chile's Codelco returned to work on Tuesday after a 24-hour strike, the protest highlighted challenges facing the world's top copper miner as it struggles to lift stagnant output. But workers will return to work at Freeport-McMoRan Copper & Gold's Indonesia mine on Wednesday, following an eight-day strike after the company agreed to start talks over pay on July 20, a union official told Reuters.
Aluminium fell to its lowest since January at $2,451 per tonne hurt by a fall in China imports and a weaker oil price, but later turned positive and ended at $2,491 per tonne. The metal had closed at $2,478 on Monday, below the 200-day moving average of $2,498. "This is quite bearish and we are suggesting a close below the head and shoulders neckline at $2,479 would confirm a much deeper sell-off is on the cards," RBC Base Metals said in a research note.
The recent drop in aluminium prices pushed shares in top US producer of the metal Alcoa Inc lower on Tuesday despite the company posting a strong second-quarter profit. Inventories of aluminium continue to fall, with headline stocks down by 6,500 tonnes net, latest data showed.
Tin finished at $27,150 from $26,600 at the close on Monday. Indonesia's tin exports for June rose 35 percent compared with the same month last year due to the end of the rainy. Zinc closed at $2,349 from $2,310, and lead at $2,733 from $2,676. Nickel ended at $23,645 per tonne, from a last bid of $23,220.