London copper paused for breath near three-year highs on Tuesday as it faced headwinds from a stronger dollar, but renewed optimism over China's economic outlook has lent support to prices.

Metal prices could find more support if China's National Party Congress this week unveils polices that extend the country's environmental-led industry reform, said Standard Chartered in a report.

“Any signalling by policy makers that the rigorous application of environmental regulations on industry and seasonal pollution-reducing policies will be the norm over the next five years will be a price-positive development for the complex.”

National Party Congress

The twice a decade National Party Congress begins on Wednesday.

London Metal Exchange copper eased 0.2 per cent to $7,118 a tonne by 0411 GMT, following its biggest daily jump in eight months at 3.7 per cent on Monday. Prices struck $7,177 a tonne in the previous session, the highest since July 2014.

Shanghai Futures Exchange copper advanced 2.4 per cent to 55,360 yuan ($8,387) a tonne. It earlier hit its highest since Feb 2013 at 55,910.

Ban on scrap copper

China may ban traders from importing scrap copper from the start of next year, a widely read industry website reported on Monday, as the world's top metals user deepens its crackdown on imports of foreign waste and cuts pollution from heavy industries.

China's producer profits and copper imports have picked up, recent data showed, even as China's economic growth is expected to ease to 6.8 per cent in the third quarter from 6.9 per cent in the previous quarter due to a cooling property sector and the government's battle against debt risks.

Rio Tinto has cut its mined copper production guidance for 2017 to 460,000-480,000 tonnes from 500,000-550,000 tonnes owing to a delayed ramp-up at its Chilean Escondida mine.

SHFE zinc slipped by 1 per cent but was still near its highest in 9-1/2 years, having peaked at 26,630 on October 9. LME zinc was also within reach of decade highs at $3,308.75, with supply constrained by China's crackdown on polluters in heavy industry.

The premium for cash zinc has slumped in recent days, suggesting that the metal may be delivered against short positions as the main October contract expires this week.

LME cash is at a $35 premium against the benchmark, down from $91 on October 12. LME zinc stocks have already climbed about 20,000 tonnes since October 5 to the highest since mid July.

US Treasury yields

Headwinds came from the dollar, which was supported by a rise in Treasury yields following a report that US President Donald Trump was favouring a policy hawk as the next head of the Federal Reserve.

Confidence among Japanese manufacturers rebounded in October to match a peak last seen in mid-2007, a Reuters poll found, further evidence that the economic recovery is gathering momentum helped by a weak yen and strong overseas demand.

comment COMMENT NOW