Nickel, zinc hit week lows as China returns, steel slumps

LONDON: Nickel and zinc hit their lowest levels in over a week on Thursday as Chinese investors sold metals as their markets opened after holidays and steel prices dropped.

Prices came off their lows in the European afternoon after the dollar reversed direction and slipped into negative territory, making commodities priced in the greenback cheaper for buyers using other currencies.

Trading on the Shanghai Futures Exchange (ShFE) resumed on Thursday after a week-long break for the Lunar New Year.

"It's a flurry of sales after the markets reopened. Probably traders, merchants and some arb players are behind this move,  looking to capture some profit before buying interest returns," said Robin Bhar, head of metals research at Societe Generale in London.

"I wouldn't have thought this would last too long given we're moving into the peak season of demand, which runs from March to June."

The move lower was across the board on the London Metal Exchange, but nickel and zinc were the hardest hit after Chinese steel futures dropped nearly 2 percent, at one point touching their weakest level in five weeks.

Nickel is mainly used in stainless steel while zinc is largely used for galvanising steel.