LONDON: Copper rose on Thursday as the dollar retreated and strong inflation data prompted a move into hard assets, sparking an early rally across base metals that also saw zinc hit its highest in a decade and nickel a near three-year peak.
Copper is on track for its biggest weekly gain since November 2016, up 6.5 percent so far on the back of optimism over global growth and weakness in the dollar, which benefits assets priced in the US currency.
"We are seeing the strong performance as very much a continuation of the themes that have been ongoing - reflation trading, the move into hard assets, and dollar-based (strength)," ING analyst Oliver Nugent said.
The dollar slipped sharply on Wednesday after higher than expected inflation and a weak retail sales report, and extended losses on Thursday to slide back towards last month's three-year low.
"It appears that the growing inflation fears ...in the US have sparked considerable buying interest in metals," Commerzbank said in a note. "Metals and commodities in general are seen as a hedge against inflation."
COPPER PRICES: London Metal Exchange copper was up 0.2 percent at $7,174.50 a tonne by 1040 GMT.
COPPER SUPPLY: Chilean mining company Antofagasta received environmental approval for a major $1.1 billion revamp of its Los Pelambres copper mine, the regional government of Coquimbo said on Wednesday.
ZINC: Zinc hit its highest since July 2007 at $3,595.50 a tonne in early trade, though it later eased back to $3,556.50, down 0.3 percent.
ZINC SPREADS: The premium for cash over three-month zinc slipped to $23.50 a tonne from a three-month high of $55.50 at the end of January, suggesting near-term tightness in the market is easing.
NICKEL: LME nickel hit its highest since May 2015 and was later up 0.5 percent at $14,165 a tonne. The metal, used in stainless steel, is expected to be supported by strong Chinese demand, supply tightness, and investment.
ALUMINIUM STOCKS: LME aluminium stocks stocks rose by 31,275 tonnes, adding to Tuesday's 158,925-tonne increase. Stocks have climbed 187,250 tonnes so far this week, on track for their biggest weekly gain since May 2009.
ALUMINIUM PRICES: LME aluminium was up 0.1 percent at $2,178.50 a tonne.
CHINA HOLIDAY: The Shanghai Futures Exchange is closed from the evening session on Wednesday until Feb. 22, reducing trading activity and increasing price volatility.
OTHER METALS: LME lead was down 0.1 percent at $2,576.50 a tonne, while tin was 0.5 percent lower at $21,450 a tonne.
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