Base metal prices increase as greenback’s rally ebbs

LONDON — Base metals recovered on Wednesday, with nickel moving off an eight-and-a-half month low as a dollar rally ran out of steam, but gains were capped by fresh sparring between Washington and Beijing over trade and by sinking steel prices in China.

US President Donald Trump said on Tuesday the US was taking a tough stance with China. That cemented expectations that fresh levies on Chinese exports will soon be announced.

Still, the dollar, which has benefited from heightened trade tensions, slipped versus a basket of currencies, making dollarpriced metals cheaper for non-US investors.

“The weaker dollar gives an opportunity to buy. Metals are oversold on these trade concerns,” said SP Angel analyst John Meyer. “Trump may have one last swing with the tariff axe but he’s likely to back off as he did with the EU, to settle with something that is far more akin to free trade than what the market fears.”

In China, steel prices tumbled for a second day as Beijing mulls allowing its northern provinces to decide individual output cuts by heavy industry — a move that could lead to oversupply.

Nickel and zinc are key steelmaking raw materials.

Three-month nickel on the London Metal Exchange closed up 3.9% at $12,620 a ton, having hit its lowest since late December at $12,085, while bellwether copper ended up 2.4% at $5,997 a ton, having hit its highest in more than a week.

Zinc, used to galvanize steel, climbed 2.6% to $2,370.50, having hit its lowest since mid-August on Tuesday, while aluminum ended up 1% at $2,064 a ton, having hit its weakest since mid-August.

Three-month aluminum traded at a discount of $39 a ton to the three-month price as the market continues to discount the possibility that supplies from Russia’s Rusal will be unavailable due to US sanctions.

Norilsk Nickel analyst Alex Khodov said the global nickel deficit would be 90,000 tons in the first eight months of 2018 and reach 120,000 tons by the yearend.

Lead closed up 2.8% at $2,020 a ton while tin ended flat at $19,050. —