Base metals rise in relief rally after China RRR cut

MELBOURNE/BEIJING — Base metals moved higher on Monday, led by steellinked nickel and zinc, after top metals consumer China took measures to boost lending following a contraction in industrial growth and focus shifted to its trade talks with the United States.

China’s central bank on Friday said it was cutting reserve requirement ratios (RRRs) — the amount of cash that banks have to hold as reserves — for the fifth time in a year, freeing up $116 billion for new lending as it tries to avoid a sharp economic slowdown.

Helen Lau, an analyst at Argonaut Securities in Hong Kong, said a relief rally had been triggered by the RRR cut and dovish comments from the US Federal Reserve.

“Many metals and metal stocks have dropped a lot and reached attractive valuation,” she wrote in a note, while cautioning that markets “should remain volatile” before more certainty emerges.

Zinc, used to galvanize steel, rose 1.5% on the Shanghai Futures Exchange (ShFE) to 20,545 yuan ($3,001.20) a ton, tracking gains in Shanghai rebar on expectations looser lending would stimulate growth in industries like construction. London Metal Exchange (LME) zinc added 0.8% to $2,457.50 a ton 0409 GMT, having touching its weakest in more than three months on Thursday.

Nickel, used to make stainless steel, climbed as much as 2.5% in Shanghai to 91,100 yuan a ton, its highest since Dec. 19. LME nickel edged up 0.5% to $11,160 a ton.

LME copper shrugged off an early dip to edge up 0.1% to $5,921.50 a ton after touching its weakest in around 18 months last week. ShFE copper jumped by 1.3% to 47,360 yuan a ton.

Federal Reserve Chairman Jerome Powell on Friday sought to ease market concerns that the US central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year.

US President Donald Trump said on Sunday talks with China were going very well and that weakness in the Chinese economy gave Beijing a reason to work toward a deal to resolve the Sino-US trade row that has roiled markets. —