* LME/ShFE arb: tmsnrt.rs/2oQ5nm2
* Premium for cash zinc sees metal go back on warrant
* China’s aluminium output at record high in June (Adds closing prices)
By Pratima Desai
LONDON, July 17 (Reuters) - Copper prices hit 4-1/2-month highs on Monday as better-than-expected economic data from top consumer China and a weak dollar helped reinforce expectations of strong demand.
Benchmark copper on the London Metal Exchange ended up 1.2 percent at $5,996 a tonne from an earlier $6,022.5, its highest since March 2.
“There’s a bid across the complex on the Chinese data,” said Macquarie analyst Vivienne Lloyd. “The dollar is also helping.”
CHINA DATA: China’s economy grew by 6.9 percent in the second quarter from a year earlier, faster than expected. Industrial production rose 7.6 percent in June year-on-year, above the 6.5 percent expected and the fastest in three months.
CHINA PROSPECTS: “The manufacturing sector is heavily dominated by the private sector, which accounted for over 70 percent of China’s economic output,” HSBC analysts said in a note. “The recovery of the private sector is the most notable and positive development since last year, and bodes well for both growth and debt sustainability.”
DEMAND: China accounts for nearly half of global copper consumption estimated at 23 million tonnes this year.
DOLLAR: The U.S. dollar hit a 10-month low against a basket of currencies, making dollar-denominated commodities cheaper for holders of other currencies and potentially boosting demand.
TECHNICALS: Copper support around $5,870, a Fibonacci level. A sustained break of strong resistance at $6,000 could trigger further buying towards $6,030, the March high. “If copper holds above $6,000, we’ll see momentum players jumping in,” a copper trader said.
ZINC SPREAD: A small premium for cash zinc over the three-month CMZN0-3 has seen metal put back on warrant in LME registered warehouses. Metal available to the market is up at 37 percent from 25 percent last week.
CHINESE ALUMINIUM: Aluminium prices were capped by Chinese production, which jumped 7.4 percent year-on-year to 2.93 million tonnes in June, exceeding December’s record of 2.89 million tonnes. China accounts for more than half of global aluminium supplies, estimated at 60 million tonnes.
CHINA CRACKDOWN: Expectations of lower aluminium supplies from top producer China over the coming months, due to shutdowns of illegal capacity, are expected to buoy prices. Capacity closures to improve air quality are also expected to help.
PRICES: Aluminium slipped 0.4 percent to $1,919 a tonne, zinc gained 1 percent to $2,815, lead ceded 0.8 percent to $2,296.5, tin climbed 0.6 percent to $19,925 and nickel added 0.2 percent at $9,600.
Editing by Dale Hudson