Copper prices dipped on Wednesday as the euro fell against the dollar and US retail data disappointed investors, but losses were limited by prospects that demand from top consumer China will start picking up after a week-long holiday. Benchmark three-month copper on the London Metal Exchange closed at $8,226 a tonne, down from a last bid of $8,236 on Tuesday.
Copper prices were trading about 0.4 percent lower so far for the week but were still up 1.2 percent on the month following strong gains in early February. Volumes were thin on Wednesday, however, as markets in China remained closed for the Lunar New Year holiday. Markets in Taiwan and Hong Kong were also closed.
In the United States, retail sales barely rose in January as tax increases and higher gasoline prices restrained spending, suggesting the economy got little help from consumers at the start of the year. 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, an analyst at VTB, said.
The dollar pared losses against a basket of currencies as the euro turned negative against the US currency ahead of a G20 meeting in Moscow this week. A stronger dollar makes metals more expensive for holders of other currencies. Three-month zinc prices hit a 17-month intraday high at $2,230 a tonne, supported by chart and momentum-based buying that drove prices higher last week. It closed at $2,195 from $2,210 on Tuesday. "Zinc ... will likely see fresh momentum buyers in the market over the coming days," said RBC Capital in a note.
Among other metals, aluminium closed at $2,141 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 to help keep aluminium markets in surplus and dampen the price upside, Australia's Northern Territory government was helping Rio Tinto source cheaper energy in order to keep its Gove alumina refinery open. Lead closed at $2,405 from $2,414, nickel at $18,360 from $18,365 and tin at $24,950 from a last bid of $24,875.
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