Jan 17 (Reuters) - Copper prices edged higher on Monday, drawing support from tight supply, but gains were limited by a firmer dollar as investors raised bets on several U.S. rate hikes this year.
Three-month copper on the London Metal Exchange edged 0.2% higher to $9,742.5 a tonne by 0700 GMT. Prices fell 2.4% on Friday, marking the biggest decline since Nov. 26.
The most-traded February copper contract on the Shanghai Futures Exchange closed down 1.8% at 70,170 yuan a tonne.
"COVID-19 is still causing logistical issues globally and delays in trading activities make for smaller inventory levels than ever before," CRU analyst He Tianyu said.
On-warrant LME copper inventories were at 78,375 tonnes, down 67% from August highs.
Stocks in warehouses monitored by the Shanghai Futures Exchange were at 30,330 tonnes, hovering close to their lowest level since 2009.
Prices are expected to be volatile amid low inventory levels and declining consumption ahead of the Chinese Spring Festival holidays, Jinrui Futures wrote in a note.
Meanwhile, data showed top metal consumer China's economy rebounded in 2021 from its pandemic-induced slump but weak consumption at the year-end and a property slowdown point to cooling momentum and the need for more policy support.
The People's Bank of China cut loan rates to cushion risks of a further economic slowdown.
Capping further advance in prices, the dollar held to gains, after bouncing off a more than two-month low in the previous session.
FUNDAMENTALS
* LME aluminium rose 0.6% to $2,995 a tonne, nickel eased 0.2% to $22,155 a tonne, lead rose 0.6% to $2,370, zinc was up 0.2% at $3,529.5 and tin gained 0.4% to $40,500.
* The premium for cash nickel over the three-month contract jumped to $376.50 per tonne, the highest since April 2009, suggesting tightness in nearby supplies. Meanwhile, nickel inventories in LME-registered warehouses were at 97,746 tonnes, the lowest since December 2019.
* Stocks in Shanghai Futures Exchange warehouses are close to record lows at 4,711 tonnes.
* ShFE aluminium fell 0.5% to 21,125 yuan a tonne, nickel was down 0.9% at 162,580 yuan, zinc dropped 1.5% to 24,545 yuan, lead rose 0.5% to 15,660 yuan and tin edged 0.3% higher to 308,080 yuan.
* China's aluminium output for 2021 hit a record high, official data showed, though monthly output in December fell from the corresponding period in the previous year.
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Reporting by Eileen Soreng in Bengaluru; Editing by Shounak Dasgupta
Source: Reuters