Nickel sinks to 8-month low on trade tensions

LONDON — Nickel hit an eightmonth low and zinc slipped to its lowest in three weeks on Tuesday as speculators added bearish positions against the backdrop of persistent international trade concerns and a slide in steel prices.

“The trade war theme is the overarching influence in the context of varying degrees of short positioning among the metals complex,” said analyst Nicholas Snowdon at Deutsche Bank in London.

Losses deepened in European afternoon trading as technical levels were hit, spurring further selling by speculators, traders said.

US President Donald Trump warned last week that he was ready to levy additional tariffs on practically all Chinese imports, while China is prepared to ask the World Trade Organization next week for permission to impose sanctions on the US.

Benchmark nickel on the London Metal Exchange (LME) closed down 1.5% at $12,230 a ton after hitting $12,165, its weakest since Dec. 29 last year.

CTA (commodity trading advisers) funds unleashed more selling in the zinc market, Alastair Munro at broker Marex Spectron said in a note. “Shorts are rebuilding, with the trend suggestive of the market testing… that $2,283 low from mid-August.”

Three-month zinc price dropped 2.9% to finish at $2,311 a ton, its lowest level since Aug. 16.

Nickel, largely used to make stainless steel and zinc, mainly used for galvanizing steel, were also pressured by a slide in Chinese steel futures.

Steel shed more than four percent after a source involved with China’s output-cut plan said the environment ministry could allow northern provinces to set their own production curbs over winter.

LME zinc inventories have climbed by 74% since the start of March to 229,675 tons.

Aluminum failed to build on its 1.3% rebound on Monday after a report that Russian producer Rusal could begin output cuts this month because of US sanctions. LME prices fell 2.4% to end at$2,044 a ton.

“I think we’re probably still some way off from Rusal actually cutting production, but it’s an indication of the scenario we could go back to as we saw in April,” Deutsche Bank’s Mr. Snowdon said.

Copper gave up early gains to close 0.9% weaker at $5,859 a ton; lead dropped 3.1% to $1,965 a ton after touching its lowest since Aug. 16 at $1,957.50; while tin dipped 0.2% to $19,045 a ton. —