LONDON: Aluminium touched its highest in more than two weeks on Monday and copper also gained after China unveiled interest rate reforms that may boost the economy of the top metals consumer.
The move by China, which also fuelled hopes of interest rate cuts, triggered short-covering and came on top of fears of aluminium shortages due to flooding in Shandong province in China, a big producer of the lightweight metal, traders said.
China’s central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support the slowing economy.
“We can see the market is responding (to China’s moves), bond yields are trading a tad higher, stocks are higher, and it’s creating short covering in base metals,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“In copper, the fact that we hit a record short two weeks ago and then had a failed break to the downside, that does inject some hesitation in people getting aggressively short at these levels,” Hansen added.
Benchmark aluminium on the London Metal Exchange was up 0.1pc to $1,794 a tonne in official open-outcry trading, after touching $1,807.50, the highest since July 31.
LME copper, untraded in official rings, was bid up 0.8pc at $5,789.50 a tonne.
US-CHINA TRADE: US President Donald Trump said he was less optimistic than his aides on striking a trade deal with China, saying that while he believed China was ready to come to an agreement, “I’m not ready to make a deal yet.”
ALUMINUM: Investors are still concerned about potential disruption from flooding in China’s eastern province of Shandong, the smelting heartland of the country, broker Marex Spectron said in a note.
The floods followed typhoon Lekima which struck last week, racking up billions of dollars in economic losses and widely disrupting travel.
China Hongqiao Group, the world’s top aluminium producer, said on Aug. 13 it was operating as normal after the typhoon lashed its home province Shandong.
NICKEL SPREAD: The premium of LME cash nickel over the three-month contract eased from a decade-high of $40 a tonne to $22 a tonne, suggesting nearby supply tightness has eased but the market was still relatively tight.
SHANGHAI NICKEL: Shanghai Future Exchange on-warrant nickel stocks, or those available for delivery, reached their highest since May 2018 on Friday at 28,695 tonnes.
TIN: LME tin traded down 1.1pc to $16,400 in official rings, its lowest since June 2016, while Shanghai tin dropped as much as 3.1pc to near a seven-week low after stocks surged 33pc in LME warehouses in one day, data on Friday showed.
PRICES: LME zinc fell 0.5pc to $2,250 a tonne in official trading, lead shed 0.1pc to $2,038 while nickel dropped 1.2pc to $16,010.