SHANGHAI (Dow Jones)--Copper on the Shanghai Futures Exchange settled slightly higher Tuesday after paring early gains, as investors stayed on the sidelines in the absence of economic data and amid uncertain market sentiment.
The benchmark March copper contract rose 0.1% to CNY53,610 a metric ton.
The red metal was moving between positive and negative territory in subdued volumes, with participants unwilling to make big bets amid a lack of news from equity and foreign exchange markets.
"The market needs some catalysts, otherwise prices are pretty much going to revolve around this level until the end of this year," a Shanghai-based trader at an international firm said.
Base metal prices have been under pressure in the past few months as jitters from the debt crisis in Europe and sluggish growth in the U.S. keep investors away from risky assets.
A strong rebound in the dollar against the euro last week is also weighing on dollar-denominated metals on the London Metal Exchange, pushing SHFE metals lower.
"Copper and other metals should continue to consolidate in recent ranges and will react to any headlines from external markets, but any gains are likely to be capped given weak sentiment" stemming from ongoing euro-zone sovereign debt problems, Shanghai Cifco Futures analyst Fang Junfeng said.
Analysts also said lingering concerns about a slowing Chinese economy and traditional year-end liquidity crunch may also cap copper price gains.
Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY54,400-CNY54,550/ton compared with CNY54,450-CNY54,600/ton Monday.
Three-month LME copper ended Monday's PM kerb $86 lower at $7,259/ton. It was quoted 0.6% higher at $7,304.75/ton around 0700 GMT, when the SHFE closed.
Benchmark aluminum and lead were both a tad down, while zinc inched up.
Aluminum stocks in the cities of Shanghai, Wuxi and Nanhai rose by 1,000 tons in total to 367,000 tons as of Monday, registering a third consecutive weekly rise, industry information portal Shanghai Metals Market said.
A Shanghai-based analyst at an international trading firm attributed the steady rise in stocks to weakening exports to Europe, the main destination of Chinese semi-finished aluminum products, and sluggish domestic demand given a slowing property market.
She added that new capacity, around 1 million tons--mainly from the Xinjiang Autonomous Region--could add supply pressure to the sector early next year, but "whether or not all the capacity will actually be brought online remains unclear. So far 300,000 tons [of new primary aluminum capacity] in Xinjiang are in operation."
Tuesday's settlement prices in yuan a metric ton and LME late kerb prices from Monday in dollars a ton:
Metal SHFE LME
Copper Mar 53,610 Up 80 3Mo 7,259 Down 86.0
Aluminum Mar 15,710 Down 40 3Mo 1,961 Down 42.5
Zinc Mar 14,770 Up 20 3Mo 1,838 Down 30.0
Lead Feb 15,080 Down 25 3Mo 1,935 Down 25.0
-Yue Li contributed to this article; Dow Jones Newswires; (8621) 6120 1200; yue.li@dowjones.com
