Nickel, zinc rebound; China jitters cap gains

MELBOURNE — London zinc and nickel rose on Monday, rebounding from declines in the previous session, but price gains were limited as investors remained cautious on the outlook for the economy in China, the world’s top metal consumer and for the US dollar.

Investors had been encouraged to cash- in profits in a recently rising metals market after China’s economic growth showed signs of slowing in August, said Dominic Schnider of UBS Wealth Management in Hong Kong, suggesting any bounce may prove short-lived. “I can’t get excited (about metals) I’m sorry to say. Chinese numbers have not really been hinting in the right direction from a fixed- asset investment point of view. I also think the market is underpricing the Fed, so the dollar has the potential to gain some more.”

A stronger dollar erodes the purchasing power for metals buyers paying with other currencies.

London Metal Exchange ( LME) copper rose 0.30% to $6,478.50 a ton by 0554 GMT. On Friday, prices fell to their lowest since Aug. 16 at $6,366. Shanghai Futures Exchange ( ShFE) copper rose 0.90% to 50,320 yuan ($7,619).

LME nickel which dropped by more than 5% on Friday after the ShFE hiked trading fees, recovered by 1.30%. ShFE nickel fell for a second day, dropping 1.90%.

LME zinc rose nearly 2%, regaining its losses from Friday.

Hedge funds and money managers cut their net-long position in COMEX copper in the latest week, US Commodity Futures Trading Commission data showed on Friday.

China’s latest push to revive its bloated state-owned sector is set to pick up pace this year, with bankers and investors expecting possible spin-offs and asset sales to follow a key Communist Party Congress in October.

Some banks have begun to pare back credit lines to smaller trading companies holding industrial metals in South Korea amid escalating tensions over North Korea’s nuclear and missile program, two industry sources said this week.

China’s mining industry will shrink if the government does not cut it some slack in return for compliance with strict environmental policies, the head of one of the country’s largest gold miners said on Saturday.

Kazakhstan- focused copper miner Central Asia Metals said it would buy Bermuda-based Lynx Resources Ltd, a miner of lead and zinc, in a $ 402.50 million reverse- takeover deal from its owners.