London - Copper prices edged up on Wednesday, helped by a drop in the dollar against the euro and hopes that demand will pick up from top consumer China after the Lunar New Year holiday.
Benchmark copper futures on the London Metal Exchange rose to $8,264.75 a tonne at 12:25 SA time, up 0.3 percent from a last bid of $8,236 a tonne on Tuesday.
Volumes, however, were thin as markets in China remained closed for the week-long Lunar New Year holiday.
Markets in Taiwan and Hong Kong were also closed.
“Some optimism surrounding Chinese demand is driving prices higher and after recent price weakness, some investors see buying opportunities in the market,” said Daniel Briesemann, analyst at Commerzbank.
Recent data from China has fuelled optimism that the country's appetite for metals demand could pick up following the holiday season.
China accounts for about 40 percent of global refined copper demand.
Last week data showed exports and imports surged and new lending soared in January, signalling not only a solid recovery in domestic and overseas demand, but also risks that inflationary pressures are building.
“(The) numbers have yet again confirmed that the world's top industrial economy is turning the corner, as growth rates pick up after the 2Q-3Q12 lull,” Andrey Kryuchenkov, analyst at VTB said in a note.
A rise in the euro against the dollar also supported gains.
A weak dollar makes dollar-priced commodities cheaper for holders of other currencies.
Copper prices are trading about 0.4 percent lower so far this week, but are still up 1.2 percent on the month following strong gains in early February.
Zinc prices hit a fresh 17-month intraday high at $2,230 a tonne, supported by chart and momentum-based buying that drove prices higher last week.
“Zinc ... will likely see fresh momentum buyers in the market over the coming days,” said RBC Capital in a note.
Prices traded at $2,218 a tonne midmorning, up from $2,210 a tonne on Tuesday.
Among other metals, aluminium rose to $2,135.75 from Tuesday's close of $2,118.
Aluminium inventories in LME-registered warehouses rose by 4,775 tonnes, latest data showed, bringing total stock to 5.15 million tonnes.
Reflecting government support that is helping to keep aluminium markets in surplus and dampening the price upside, Australia's Northern Territory government is helping Rio Tinto source cheaper energy in order to keep its Gove alumina refinery open.
Lead climbed to $2,435 from $2,414, nickel rose to $18,433 from $18,365 and tin was at $24,900 from a last bid of $24,875. - Reuters