“A slew of macro releases out of China also buoyed sentiment [on Monday]. In this regard, China's industrial output rose 35% in the first two months vs a year earlier and was also up 7.3% month-over-month during the Jan-Dec period,” ED&F Man’s head of commodity research Edward Meir said.

“The latter increase was actually more impressive, as the year-over-year advance was heavily skewed by depressed activity left over from year-ago levels,” he added.

On Tuesday morning, however, prices were lower. The three-month tin price fell by 2.7% this morning, following a decline of 1% on Monday – the only metal to fall that day – to $25,310 per tonne.

Copper was down by 1.7% to $8,984.50 per tonne shortly after 9am, following an increase of 0.6% on Monday to $9,144 per tonne.

There was a 12,125-tonne inflow of the red metal into LME warehouses in Rotterdam – where 70% of the exchange’s total copper stocks are held – on Tuesday, the largest intake of copper this month.

Elsewhere, an 85,000-tonne fresh cancellation of aluminium on Tuesday (with 83,850 tonnes being cancelled in Port Klang, and the remainder in Singapore and Johor) followed a cancellation of 44,725 tonnes on Monday.

This was a scenario which most market participants envisioned following the over 600,000 tonnes intake of material into LME warehouses – largely into Port Klang, Malaysia – on Thursday and Friday of last week.

“I wouldn’t be surprised to see whoever delivered it in, sift through it, take what they want and cancel the rest,” one trader said following the inflow.

Aluminium’s three-month price was $7 per tonne lower on Tuesday morning after the cancellations to $2,211 per tonne.

The light metal’s high price on both the LME and Shanghai Futures Exchange has been supported by production cuts ordered by local authorities in Baotou city, the capital of Inner Mongolia autonomous region.

“The underlying themes with economic recovery, stimulus spending and constrained supply chains should all be bullish for commodity prices, but there are potential tripwires. First, how much of the bullishness has already been baked into the prices,” Fastmarkets head of base metals and battery research William Adams said in a morning note.

“Second if broader markets get jittery, a correction in bonds and equities would likely flow into the metals, at least initially. As such, we would be wary around key events like Wednesday’s US Federal Open Market Committee meeting and what the markets take away from that is,” he added.

Other highlights
  • Zinc’s three-month price was down by 0.9% to $2,832 per tonne on Tuesday morning after rising by 1.9% to $2,858 per tonne on Monday at the close.
  • The US Dollar Index was up to 91.90 on Tuesday, following a rise to 91.85 on Monday.
  • Economic data out on Tuesday in Europe includes French consumer prices and EU and German ZEW economic sentiment readings.
  • In the United States, there will be data out on retail sales, import prices, industrial production, capacity utilization, business inventories and the housing market index from the National Association of Home Builders.