Copper, nickel rise as China pledges support for firms

LONDON — Copper rose on Friday and nickel prices rebounded from a one-month low after China pledged support for firms with liquidity issues brought on by months of slowing growth.

Both metals ended the week down, however, under pressure from a firmer dollar and the negative effects of a lingering trade dispute between the US and China.

“Whatever words of support the Chinese officials are providing to non-state banks or struggling firms should also help support for other cyclical assets including base metals,” ETF Securities commodity strategist Nitesh Shah said. “This would reduce the threat of demand falling away in the Chinese economy.”

China is the world’s top consumer of metals.

The benchmark copper contract on the London Metal Exchange (LME) closed one percent higher at $6,220 per ton, but still ended the week more than one percent lower.

LME nickel ended 0.8% higher at $12,445 after slumping to its lowest since Sept. 18 on Thursday.

Production cuts ordered for this winter by China’s top steelmaking city Tangshan look less restrictive than last year, analysts said, potentially keeping output high even as the city seeks to fight pollution by cutting smokestack smog. China’s economic growth in the third quarter slowed to its weakest pace since the global financial crisis, and missed expectations, as a years-long campaign to tackle debt risks and the trade war with the US began to bite. “Beijing has announced a number of stimulus measures to offset the impact of trade tensions with the US, however this could take some time to feed through,” ING said in a note.

China’s primary aluminum production fell for a second straight month in September, sliding to its lowest level since May as weaker aluminum prices and higher input costs led smelters to cut back output.

LME nickel stocks have slumped 43% since this time last year to about 220,000 tons. In warehouses monitored by the Shanghai Futures Exchange, zinc stocks jumped 23.3% to 53,479 tons from a week ago while copper stocks rose 12% to 140,789 tons.

China’s daily steel output hit a record-high 2.7 million tons in September, as mills in the world’s top producer cashed in on strong profit margins before the start of winter production curbs aimed at tackling smog.

Aluminum rose 0.5% to $2,023 per ton; zinc finished 2.1% to $2,653; lead fell 0.5% to $1,991.50; and tin gained 0.7% to $19,170. —