* Post-holiday demand in China yet to pick up * Upward trend in metals intact, but facing headwinds (Recasts; updates prices; adds comment) By Rujun Shen and Edmund Klamann SHANGHAI, Feb 23 (Reuters) - Shanghai copper regained some of the lost ground on Tuesday, following a rebound in China's stock market, but prices are likely to enter a period of consolidation as the market waits for seasonal demand to return. The benchmark Shanghai Composite index .SSEC ended down 0.7 percent, recovering from a 2-percent fall earlier in the day as concern eased over interest rate hikes. [ID:nBJD003510] "The upward trend in metals is intact, but is facing headwind. Prices are likely to move in a wide range in the next few months," said Fang Junfeng, an analyst at Shanghai CIFCO Futures. Shanghai's benchmark third-month copper futures contract SCFc3 edged down 0.2 percent to end at 58,890 yuan a tonne, rebounding from an intra-day low of 58,260 yuan a tonne. Three-month copper on the London Metal Exchange CMCU3 pared losses from earlier in the day to $7,320 a tonne by 0701 GMT, down $10 from the previous close. "We are seeing some technical correction in copper prices," said Zhu Yanzhong, an analyst at Jinrui Futures. "But the bright outlook for the second quarter will give strong support to copper prices, despite the tightening signals." Market needs to adjust to the 9-percent gain in copper prices on the London Metal Exchange last week, when China paused to celebrate the Lunar New Year, analysts said. Support for Shanghai copper will be around 57,000 yuan to 58,000 yuan a tonne, and for LME copper, $7,000, Zhu added. The much-expected post-holiday buying from China has yet to emerge, as many factories have not returned to production, analysts and traders said. "Traditionally seasonal demand should be strong from March to May, as copper tube production steps up to meet demand from air-conditioner producers. But so far we haven't seen much of that," a Shanghai-based trader said. Buying was scarce after Shanghai copper opened up about 6 percent on Monday, leading to sharp falls in the open interest in copper contracts. Open interest in Shanghai's copper contracts fell 19,730 lots from the previous session to 142,436 lots on Monday, according to exchange data. Aluminium was the only metal in the positive territory, with Shanghai aluminium SAFc3 edging up 0.2 percent to 17,015 yuan a tonne and LME aluminium MAL3 up $9 to $2,159. Although LME's aluminium stocks were still near record highs, cancelled warrants -- materials tagged for delivery -- rose to 302,025 tonnes as reported on Monday, compared with 243,175 tonnes on Jan. 19. "Demand from downstream users is improving," said Liang Lijuan, an analyst at COFCO Futures. "Aluminium prices are supported around 16,000-yuan level by higher production cost." Production cost of aluminium in China has risen to at least 15,000 yuan a tonne, from 13,000 yuan at the end of 2008, due to higher power tariff and raw material cost, lifting price floor for the metal, she added. Base metals prices at 0701 GMT Metal Last Change Pct Move End 2009 YTD pct chg LME Cu 7320.00 -10.00 -0.14 7375.00 -0.75 SHFE Cu* 58890.00 -120.00 -0.20 59900.00 -1.69 LME Alum 2159.00 9.00 +0.42 2230.00 -3.18 SHFE Alum* 17015.00 35.00 +0.21 17160.00 -0.84 COMEX Cu** 327.50 -3.15 -0.95 332.75 -1.58 LME Zinc 2284.50 -5.50 -0.24 2560.00 -10.76 SHFE Zinc 18775.00 -65.00 -0.35 21195.00 -11.42 LME Nickel 20440.00 -35.00 -0.17 18525.00 10.34 LME Lead 2321.00 -4.00 -0.17 2432.00 -4.56 LME Tin 16900.00 -275.00 -1.60 16950.00 -0.29 LME/Shanghai arb^ -389 Dollar/yuan 6.8307 \ 6.8312 ** 1st contract month for COMEX copper * 3rd contact month for SHFE aluminium, copper and zinc ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month (Editing by Himani Sarkar)

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