LONDON: Copper prices edged up to their highest in more than a week on Wednesday on a softer dollar while aluminium retreated as raw material prices slumped, raising expectations of more supply.
Three-month copper on the London Metal Exchange (LME) was up 0.1% at $9,160 a metric ton at 1030 GMT after touching the highest since Jan. 27 at $9,204.
Copper was supported by a weaker dollar index, which was weighed down by a jump in the yen.
A softer dollar makes commodities priced in the U.S. currency less expensive for buyers using other currencies.
The most-active copper contract on the Shanghai Futures Exchange (SHFE) dipped 0.3% to 75,290 yuan ($10,342.60) a ton on the first day of trading since the Lunar New Year holidays.
LME aluminium fell 0.9% to $2,613.50 a ton. The metal, used in transport, packaging and construction, had hit its strongest in more than two months on Jan. 20, partly due to worries about shortages of raw material alumina and resulting high prices.
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“The bullishness in aluminium was a bit overdone. With alumina prices a lot lower, there is quite a strong incentive to boost output,” said Dan Smith, head of research at Amalgamated Metal Trading.
Alumina prices on SHFE have dropped by a third so far this year to 3,588 yuan per ton after hitting record highs last year.
Smith was also sceptical that there would be strict observance of a government cap on aluminium smelter production in China of 45 million tons a year.
“I have this hunch that maybe that’s not going to be quite as watertight as you might think. It wouldn’t surprise me if the supply side in China surprises a bit on the upside.”
Among other metals, LME zinc eased 1% to $2,779.50 a ton while lead climbed 0.7% to $1,984, nickel gained 0.4% to $15,335 and tin added 0.9% to $30,530.
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