* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2 (Updates throughout, changes MELBOURNE dateline)
LONDON, July 19 (Reuters) - Copper hovered near a four-and-a half month high on Wednesday, as higher steel prices and upbeat Chinese data boosted expectations for strong demand, though a firmer dollar capped gains.
Benchmark copper on the London Metal Exchange was down 0.1 percent to $5,997.50 a tonne at 0956 GMT, close to a an early May high of $6,022.50.
"All metals generally are still benefiting from China data and from rising Chinese steel prices," said Capital Economics commodities economist Caroline Bain.
STEEL: China's iron ore futures hit their highest in 2-1/2 months on Wednesday, as speculators added bullish bets and shorts continued to cover their positions, spurring hopes for higher demand from steel mills for metals.
CHINA DATA: A pick-up in the industrial sector helped China post better-than-expected second quarter economic growth as finance and real estate expansions slowed to multi-year lows.
DOLLAR: The U.S. dollar rose 0.2 percent, making dollar-denominated commodities slightly more expensive for holders of other currencies and potentially curbing demand. The greenback was still near 10-month lows, though.
SUPPLY: Workers at Chile's Zaldivar copper mine, owned by Antofagasta PLC, will vote on a new contract offer later this week after a vote to strike last week prompted government-mediated negotiations.
STOCKS: Copper inventories in LME-registered warehouses inched up 1,975 tonnes to 309,250 tonnes. They have added 27 percent since June 29.
TECHNICALS: "Copper is trapped in a tight range. It is pricing well but not really getting on with it and as such I think the drift we are seeing is more bored length exiting than genuine supply side selling," said Marex Spectron's head of metal sales Matt France.
COPPER OUTLOOK: "We think this is as good as it gets for Chinese data," Capital Economics' Bain said. "There has been a tightening of policy in the first half of this year and we expect that to lead to somewhat lower activity in the second half."
BHP SUPPLY: Miner BHP Billiton said annual copper production of 1.3 million tonnes fell short of its target due to a strike at its giant Escondida mine. It expects to mine between 1.65-1.79 million tonnes in 2018.
PRICES: Aluminium was barely changed at $1,933 tonnes, lead fell 0.7 percent to $2,259.50, tin added 2 percent to $20,040, zinc shed 0.4 percent to $2,782 while nickel lost 0.3 percent to $9,755.
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(Additional reporting by Melanie Burton in Melbourne; Editing by Mark Potter)