Copper rose on Thursday on optimism that demand from China will pick up after the Lunar New Year, but volumes were thin due to the week-long holiday in the world's top copper consumer. Three-month copper on the London Metal Exchange was untraded at the close, but bid at $8,237 a tonne, up from $8,226 on Wednesday.
Volumes were slowly recovering from extremely low levels at the start of the week as some Asian nations returned from holidays. But China, which accounts for 40 percent of global copper demand, will resume trading only next week. Investors kept their focus firmly on China, where data last week showed January exports and imports surged and new lending soared, signalling not only a recovery in domestic and overseas demand but also risks that inflationary pressures are building.
"There's a feeling that the importance of China is much greater than Europe, and prospects there have been improving for some time. Also GDP data is somewhat backward looking. More recent PMI data for almost all regions was more encouraging," said Ross Strachan, an economist at Capital Economics. But he added: "Our expectation is for prices to be broadly around current levels over coming months, because ... a lot of the improved macro data has been effectively priced in."
Limiting gains, the dollar rose versus the euro after data showed the euro zone had slipped far deeper than expected into recession at the end of last year. The dollar also gained strength from US data showing the number of Americans filing new claims for unemployment benefits fell more than expected last week. A strong dollar makes dollar-priced metals costly for European investors.
Aluminium prices rose to a fresh six-week high at $2,166.50 a tonne. "Aluminium's next target will be the January high, where a break and close above would set up a test of $2,200," RBC Capital said in a note. LME aluminium, which hit a 3-1/2 month peak of $2,184 on January 3, ended at $2,158, from $2,141 a tonne.
China's state-owned CITIC Group has bought a $452 million ($467 million) stake in Australia's Alumina Ltd, the world's largest alumina business. China's imports of the material used to make aluminium jumped by 165 percent last year in part due to uncertainty over Indonesian supply of bauxite. Soldering metal tin ended at $24,825 a tonne from $24,950, while zinc, used in galvanising, closed at $2,189 from $2,195. Battery material lead ended at $2,406.50 from $2,405 while stainless-steel ingredient nickel closed at $18,255 from $18,360.