London metals futures pressed higher when trading started on Tuesday following an early fault at the London Metal Exchange, paring Monday's 3.5 percent fall and helping to reverse a decline in Shanghai.
LME copper prices, up 29 percent this year, are heading for their biggest quarterly rise since June 2006. Shanghai's 40 percent quarterly surge is the biggest on record.
The market looks quite strong. People are playing the ranges, and that will continue. The top is $4,100. It's been tried but won't break it this week, a dealer in Singapore said.
Shanghai copper for June delivery SCFc3 rose 0.7 percent to 33,380 yuan a tonne at midday, while LME copper MCU3 rose $50 or 1.3 percent to $3,960.
The premium for Shanghai copper above the LME benchmark,including China's 17 percent VAT widened to 1,670 yuan from 1,500 late on Monday, enough to encourage merchants to ship metal into the country.
The start of LME trading was delayed to around 0220 GMT by a technical glitch, but dealing soon caught up with some 1,500 lots of copper trading by midday on LME Select.
On Monday, metals fell in tandem with Wall Street after President Obama ordered General Motors and Chrysler to accelerate their turnaround efforts and brace for possible bankruptcy.
Obama's comments on the auto industry will mean tough times for metals, but a lot of bad news has been priced in and investors are content sitting on the sidelines with a box of popcorn, watching things develop, the Singapore trader said.
LONG THE MARKET
Shaky confidence in financial markets gave the dollar and bonds a lift in the second half of 2008, driving down commodities by making them more expensive in other currencies, but that process may be drawing to a close.
The commodities complex is bottoming. We might still seethe odd probe lower, but in general we are long the market, said Jonathan Barratt, managing director of Commodity Broking Services.
We are not 100 percent geared to a recovery yet, but given the mix of fiscal and monetary policy we think will see higher inflation and therefore stronger commodity prices.
Shanghai aluminium SAFc3 rose 25 yuan to 12,740 yuan. Shanghai aluminium has rallied around 10 percent this year on stockpiling by the State Reserves Bureau and provincial governments, while London prices have dropped 8.7 percent, attracting metal into China and prompting smelters to restart.
More than 700,000 tonnes, or 10 percent, of the country's idle aluminium capacity is in the process of restarting, while imports in March may hit 200,000 tonnes, almost double the whole of 2008.
Aluminium is a risky play still. In the long term, these prices still look cheap, but given the huge stock overhang, the restarts in China and what we are hearing about huge Chinese imports in the next couple of months, there is some downside, a trader in Shanghai said.
(Editing by Ben Tan)