Nickel boosted by China steel; dollar caps gains

LONDON — Nickel gained on Monday as the metal mainly used in stainless steel got a boost after Chinese steel futures touched three-month highs, but a firmer dollar capped the rise.

Steel and iron ore contracts in Shanghai surged on Monday as government- ordered steel production cutbacks to reduce pollution led to tighter supplies for some mill products.

The stronger prices might not last long because eventually the steel production cutbacks during the peak Chinese smog season in the winter would mean less need for nickel, Caroline Bain, chief commodities economist at Capital Economics, said.

‘OVER-OPTIMISM’ ABOUT CHINA

Benchmark nickel on the London Metal Exchange (LME) closed 0.80% higher at $11,385 a ton, paring gains after touching an intraday high of $11,470.

Capital Economics expects nickel — which has declined by 12% from a two- year peak of $13,030 hit on Nov. 1 — to end this year at $10,750.

Other metals are also likely to see a modest amount of further downside, Ms. Bain added.

“There’s quite a lot of speculation in the market and we think there’s over-optimism about the strength of Chinese demand,” she said.

“I think there are clear signs now that the economy is cooling, particularly in the metals intensive industries.”

Weighing on the wider metals complex was a rebound in the dollar after the US Senate approved a tax overhaul at the weekend. A firmer dollar makes commodities priced in the greenback more expensive to buyers using other currencies.

LME three month copper dipped 0.10% to finish at $6,826 a ton.

“Whilst China property concerns remain, steady global growth expectations coupled with on-going mine supply disruptions are likely to lend support on dips with $6,550-$6,650 the bottom of a new range,” Alastair Munro at broker Marex Spectron said.

China’s economic growth target for 2018 will reflect new changes in the economy as the government puts more emphasis on higher quality development, the State Council Information Off ice said on Monday.

LME aluminum fell 0.30% to end at $2,069 a ton.

Lead dropped 1.50% to close at $2,507 a ton, reversing in the afternoon session after touching a seven-week high of $ 2,560 in the morning.

Zinc shed 2.20% to finish at $3,178 a ton while tin rose 0.40% to $19,525. —