But investors are worried that the pact would not substantially boost metals demand as the deal left a number of sore spots unresolved, while demand has not improved significantly to support prices.
"Copper is a bit over-stretched. The signing of the phase one deal is pretty much priced in. There was no surprise to the market," said a Singapore-based metal trader.
"There's not much demand on the physical side and inventory has been low for quite some time. Once the market prices all of these in, it cannot fuel another rally," said the trader.
LME copper has gained as much as 7.4% since Dec. 5 last year over optimism of the trade deal.
COPPER: Copper inventories in LME-approved warehouses fell to a 10-month low of 128,050 tonnes on Tuesday, latest data showed.
SPREAD: However, the discount between LME cash and three-month contract expanded to a more than three-month high of $34.50 a tonne, suggesting no nearby supply shortage.
TECHNICALS: LME three-month copper is facing a resistance of $6,371.54 a tonne while its supporting level stands at $6,225.47 a tonne, Reuters commodities and energy technical analyst Wang Tao said.
PRICES: ShFE aluminium climbed to a three-week high of 14,145 yuan a tonne, while LME aluminium advanced 0.2% to $1,805 a tonne. Aluminium is the only base metal making a loss so far this year on the LME, down 0.2%.
SQUEEZE: An analyst and a trader said a major aluminium producer, holding long positions, is squeezing the market amid low stocks in ShFE warehouses and taking advantage of the easing trade tension between the United States and China.
STOCKS: Headline aluminium inventories in warehouses tracked by ShFE hit their lowest in nearly two years in late December at 185,127 tonnes, an 81% drop from a record high of 993,207 tonnes in 2018. Stocks had since picked up to 193,899 tonnes on Friday, latest exchange data showed.
PRICES: LME nickel fell 0.5% to $14,255 a tonne, while tin rose to a four-month high of $17,600 a tonne. In Shanghai, nickel jumped 2% to 111,420 yuan a tonne and lead climbed 1.5% to 15,225 yuan a tonne.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Most active ShFE nickel
Three month LME tin
Most active ShFE tin
ARBS ($1 = 6.8843 Chinese yuan renminbi) (Reporting by Mai Nguyen; Editing by Subhranshu Sahu and Shailesh Kuber)
© Reuters News 2020