Copper futures have closed higher on the London Metal Exchange (LME), rebounding from a near-four-year low as lower valuations tempted bargain-hunters back into the market.
The LME's three-month copper contract was 1.1 per cent higher at $US6,552 a metric ton at Wednesday's PM kerb close. The metal had fallen 2.5 per cent to $US6,321 a ton, its lowest price since July 1, 2010.
Copper's rebound was primarily driven by bargain-hunting at lower prices and technically-driven buying, said Robin Bhar, head of metals research at Societe Generale.
"Copper found some reasonable dip buying and, as it went higher, it triggered some upside stops," said Bhar.
"I think, essentially, copper's trying to find a floor, which is why it's been so volatile."
Copper initially fell on Wednesday amid concerns over Chinese appetite for the metal following a sharp decline in the Chinese yuan and ongoing tensions in Ukraine.
Base metal prices often fall at times of heightened macro-economic and political risk, reflecting their wide use in industry and manufacturing.
In other base metals on Wednesday, stockpiles of aluminium held in LME-registered warehouses jumped 208,125 metric tons overnight, driven by 217,375-ton delivery of the metal into Rotterdam.
Analysts said the jump likely was the result of metal being moved "on warrant" as part of a financing deal -- where producers sell or pledge metal to traders or banks to raise working capital, with the result that the metal is locked up in a warehouse.
"As to why it was placed on-warrant, the most plausible reason seems to be a traditional warehouse rent-deal, with the financier perhaps preferring the security of LME warranted material as collateral rather than having metal sitting in a field somewhere," said Leon Westgate, an analyst at Standard Bank.
The metal may also simply have been backing a short-position held by a large bank or trading house that had been unwound, said Bhar.
"This looks like a short position holder electing to deliver against that short position, since it's the third Wednesday of the month," a popular date for the physical settlement of LME futures positions, said Bhar.
"You do tend to see chunky bits of metal moving back onto warrant, coming out of the grey area into the more visible area" on popular settlement days, he added.
Aluminium closed 0.2 per cent higher at $US1,739 a ton Wednesday.
