Copper prices overnight hit their highest point since May as traders awaited the signing of a US-China Phase 1 trade deal and Chinese data that will show whether a pick-up in economic activity has been maintained.

China is the largest consumer of metals, but the trade dispute with Washington contributed to a slowing of its economy in 2019, pushing down industrial metals prices.

Factory output in China began to contract last year but returned to expansion in November and December.

A Reuters poll showed that December export and import growth is expected to have improved. Data including trade, GDP and new loans are also due this week.

Benchmark copper on the London Metal Exchange (LME) ended 1.5 per cent up at $US6,290 a tonne after touching $US6,291, its highest since May 1.

“Copper and the rest of the base metals have come a long way already – partly driven by the trade talks, the Phase 1 deal and the improvement in the Chinese economy,” said Danske Bank analyst Jens Pedersen.

However, he said further progress in trade talks would be difficult and China’s economy may not improve more than it already has.

“Copper prices will probably level off around these levels,” he said.

Chinese Vice Premier Liu will visit Washington over January 13-15 to sign a trade agreement.

The Phase 1 deal “stops the bleeding” but does not end the trade war, a senior US Chamber of Commerce official said on Monday, warning that significant challenges remain.

World stock markets ticked higher and were near record highs.

China’s currency strengthened sharply against the dollar, taking its gains since the start of December to about 2 per cent and making dollar-priced metals cheaper for buyers in China.

The China Association of Automobile Manufacturers (CAAM) expects a 2 per cent fall in vehicle sales in the world’s largest car market this year after an 8.2 per cent drop in 2019.

Britain’s economy in November grew at its weakest annual pace in more than seven years.

Headline copper inventories in LME-registered warehouses fell by 2,725 tonnes to 130,000 tonnes, down 60 per cent from August and the lowest since March.

The discount for LME cash copper against the three-month contract, at $US24.75, suggested no shortage of nearby metal.

Speculators cut their net short in LME copper to 5.7 per cent of open contracts by Thursday, from 17 per cent at the end of last month, broker Marex Spectron said.

Top copper miner Codelco may not renew an agreement to supply copper concentrate to China’s Shandong Fangyuan for 2020 because of financial problems at the private smelter, sources said.

New Chinese standards for high-grade copper and aluminium scrap will come into force from July 1.

LME aluminium finished down 0.4 per cent at $US1,798 a tonne, zinc gained 0.1 per cent to $US2,378, nickel fell 0.7 per cent to $US14,090, lead slipped 0.8 per cent to $US1,916 and tin closed with a 0.7 per cent gain at $US17,375.