(Updates with official prices, adds zinc high)
By Peter Hobson
LONDON, March 12 (Reuters) - Prices of copper and other base metals rose on Tuesday, helped by a weaker dollar and optimism about demand from China, the largest metals consumer.
Benchmark copper on the London Metal Exchange (LME) traded up 1.2 percent at $6,483 a tonne in official rings, nearing a 7-month high of $6,540 touched on Feb. 25.
Underpinning the rise in copper prices — which have recovered from early January’s eighteen-month low of $5,736 — are tight supplies and signs that demand in China, the biggest consumer, may hold up better than feared.
“Leading indicators of real demand are showing some signs of life,” said ICBC Standard analyst Marcus Garvey, pointing to recent increases in lending and local government bond issuance in China.
Copper is likely to return to the high $6,000s later this year, he said.
TIGHT COPPER MARKET: Headline stocks of copper in LME-registered warehouses fell to 112,725 tonnes, the lowest since May 2008. MCUSTX-TOTAL
With one entity holding between 40 and 49 percent of LME warrants <0#LME-WHL>, the premium for cash metal over the three month contract MCU0-3 remains unusually high at $23.50 a tonne.
CHINA PREMIUMS: Chinese import premiums have risen to $56.50 from a near two-year low of $52.50 last week SMM-CUYP-CN, a positive demand signal.
POSITIONING: Speculative investors cut bets on higher copper prices, with the net long in LME copper falling to 3.4 percent of open contracts by the end of last week from 13.5 at the start of March, according to brokers Marex Spectron.
LAS BAMBAS: Production at Chinese miner MMG Ltd’s Las Bambas copper deposit in Peru could fall in the near-term due to a month-long road blockade by a community that was relocated to build the mine, the company said.
TRADE TALKS: The White House said on Monday it was “absurd” to suggest that President Donald Trump was an unreliable negotiator as China reportedly balked at a summit with President Xi Jinping over concerns Trump would walk away from a trade deal.
DOLLAR: The dollar weakened for a third day, helping boost metals by making them cheaper for buyers holding other currencies.
ZINC: LME zinc traded up 2.3 percent at $2,800 a tonne after touching $2,830, the highest since July.
TIGHT MARKET: Headline LME zinc stocks have fallen to 59,200 tonnes, the lowest since October 2007 MZNSTX-TOTAL, while the premium of cash metal over the three-month contract surged to $49, the highest in two months. MZN0-3
OTHER METALS: Aluminium traded up 1.6 percent at $1,877 a tonne, nickel did not trade but was bid up 2.5 percent at $13,220, lead was bid 0.8 percent higher at $2,090.50 and tin traded up 0.5 percent at $21,150.
Additional reporting by Tom Daly; Editing by Kirsten Donovan and Jan Harvey