MELBOURNE: London copper was holding near its highest level in a fortnight on Thursday, as investors took heart from encouraging signals in China's economy and as a softer dollar lent support.
China's imports unexpectedly rose in August for the first time in nearly two years, boosted by coal and other commodities, suggesting domestic demand may be picking up and putting the world's second-largest economy on a more balanced footing.
Metals markets largely dismissed as seasonal news that China's imports of copper fell 2.8 percent from a month ago to 350,000 tonnes in August, the lowest in one year, due to a summer lull at factories and China producing more of its own refined metal.
Instead, a persistently soft dollar lent support.
"Unexpectedly weak data in the U.S. non-manufacturing sector and a weaker U.S. dollar have lent buoyancy to metal prices," Commerzbank said in a report.
London Metal Exchange copper little changed at $4,646 a tonne by 0717 GMT, following gains of 0.7 percent in the previous session when it nudged to its highest in two weeks at $4,688.50, boosted by short-covering and options expiry.
Shanghai Futures Exchange copper traded flat at 36,570 yuan ($5,487) a tonne.
The dollar has been under pressure since Friday's slightly disappointing jobs report, while a surprisingly soft service sector survey on Tuesday cast doubt about the Federal Reserve's ability to raise interest rates soon despite hawkish rhetoric from Fed officials.
A weaker dollar underpins commodities by making them more affordable to buyers paying with other currencies.
The premium of nearby tin futures over the LME benchmark has spiked to the highest in almost a year after one investor amassed up to half of the remaining LME inventories.
Spot treatment charges suggest that supply of zinc concentrates in China continue to tighten, "with refined tightness the next stage as we head into Q4", analyst Leon Westgate at ICBC Standard Bank said in a report.
China's huge zinc smelting industry has slashed its fees for turning ore concentrates into refined metal by 20 percent to mid-August from February.
Elsewhere, China's steel exports fell to the lowest in six months in August amid stronger domestic prices, offering relief to rivals overseas angered by a flood of cheap Chinese products.
Steel is typically a leading indicator for industrial metals demand and a pick up in local prices may herald further gains in nickel and zinc prices, used in stainless steel and galvanising respectively.
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