Nickel, zinc bounce on steel rally, shut Canadian mine

LONDON — Nickel and zinc rebounded on Wednesday after steel prices jumped, while nickel also received a boost from news that output at a Canadian mine would be suspended.

Meanwhile, copper was knocked lower by a fresh influx of inventories into warehouses.

Steel rebar on the Shanghai Futures Exchange jumped 4.30%, its biggest single- day rise since Jan. 10.

“Base metals shrug off a more bearish Western macro picture and react positively to the rally in ferrous markets,” Alastair Munro at broker Marex Spectron said in a note.

Nickel is mainly used to make stainless steel, while the biggest demand for zinc is to galvanize steel.

But Caroline Bain, chief commodities economist at Capital Economics, said there was little fundamental basis for stronger prices. “I’m tending to put it down to trading strategies. Our China economic team have been saying for a while that growth in China will start to slow,” she said.

“We’re fairly convinced that the government are not going to launch any stimulus, they are very committed to reining in credit growth and taking the heat out of the property market.”

The prospects of less supply bolstered nickel prices after Vale said it would suspend operations at its Birchtree nickel mine on Oct. 1 because of weak nickel prices and declining ore grades.

“The company stated that the mine was already approaching the end of its viability but more importantly they blamed the current low price levels which raises the question of how many other operations are in the same position,” Malcolm Freeman of broker Kingdom Futures said in a note.

The benchmark zinc price on the London Metal Exchange ( LME) closed 0.60% firmer at $2,561 a ton while nickel gained 1% to end at $9,215. They each shed about 1% on Tuesday.

Metals were also supported by a weaker dollar index, which wallowed near its lowest since Nov. 9 due to an intensifying political scandal around US President Donald J. Trump.

LME inventories have climbed by a third since late April after data showed on Wednesday they added another 17,100 tons to 339,600. Copper had rallied after disruptions at major copper mines earlier in the year, but Ms. Bain said much of the lost output would likely be made up.

LME copper fell into the red after the data release and finished slightly weaker, off 0.02% at $5,610.

Economic growth in top metals consumer China will just about make Beijing’s target of 6.50% this year, analysts surveyed by Reuters forecast, as it slows from 6.90% in the first quarter. —