Copper prices ended little changed Tuesday, but firmed in late electronic trade as upbeat factory orders data from the United States added to a recent series of better economic numbers that bolstered the base metals demand outlook.
Benchmark copper for March delivery on the New York Mercantile Exchange's Comex division ended up 0.75 of a cent at $3.4135 (U.S.) a pound, after dealing between $3.3820 and $3.4235. After the close, the contract traded up to a new 16-month peak at $3.4295.
On the London Metal Exchange, benchmark copper was last quoted at the kerb close at $7,485/7,490 a tonne, from $7,500 a tonne at the close Monday. After hours, the metal used extensively in power and construction traded up to $7,528, holding near Monday's 16-month peak at $7,536.
Analysts said the positive factory orders fell in line with upbeat manufacturing data from the U.S. and China on Monday, and signalled a marked improvement in the sector.
"We had the same theme running with the ISM numbers yesterday ... not only in the United States, but we had very strong results in China as well, so it certainly seems that global manufacturing is rebounding," said Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto.
"It's from a low base, but things are improving quite nicely. The market is now expecting much better demand prospects than even a few months ago," he said.
The numbers helped offset disappointing U.S. home sales data.
But keeping a lid on the momentum was news that Chilean mining giant Codelco made an improved wage offer Monday to workers at its large Chuquicamata complex, which could defuse a day-old strike.
"As demand begins to recover for base metals, prices are going to be much more sensitive to supply side developments than they were during 2009," said Gayle Berry, an analyst at Barclays Capital. "I don't think the supply side concerns will diminish completely."
Codelco, the world's leading copper producer, will set a new output record for 2009, topping the previous peak of 1.73 million tonnes reached in 2004.
A rise in LME inventories to above 505,000 tonnes, nearly double the level seen in July and the highest since March, continued to weigh on sentiment.
Record high nickel stocks - 158,424 tonnes - in LME warehouses also hit prices of the stainless steel material, which was at $18,710 a tonne from $18,950 on Monday.
Copper and aluminum prices came under pressure from commodity index rebalancing. Both metals will be sold to reduce their weightings in the Dow Jones UBS Commodity Index.
Aluminum , used in transport and packaging, was at $2,302 a tonne from $2,266 on Monday. It has been supported by financing deals which have tied up LME stocks.
"The recent rally can only be maintained as long as the huge amount of metal tied up within these deals is kept off the market," Standard Chartered said in a note.
The threat of power supply disruptions due to harsh winter weather in China, the world's top producer of energy-intensive aluminum, also offered support.
"It could constrain aluminum production," said Dan Brebner, analyst at Deutsche Bank. "We understand cold weather conditions in China could be impacting zinc and lead production."
Battery material lead was at $2,523 a tonne from $2,515 on Monday, zinc at $2,575 from $2,570 and tin at $17,350 from $17,440.