LONDON: Aluminium prices rose on Thursday as hopes of economic stimulus in leading global consumer China lifted global stock markets, while the London Metal Exchange’s efforts to resume nickel trading remained chaotic.
Benchmark aluminium on the LME was up 3.8% at $3,381 a tonne at 1723 GMT. Prices have see-sawed since Ukraine was invaded on Feb. 24 by Russia, which produces 6% of global supply, hitting $4,073.50 on March 7 and $3,219.50 on March 15.
“There are visible signs of China decelerating and that is likely to hit overall demand,” said WisdomTree analyst Nitesh Shah.
Against that, demand for both aluminium and copper is likely to be boosted as the energy transition comes into sharper focus, especially in Europe, Shah said.
He said that industrial metals would be undersupplied “pretty much across the board” this year and predicted higher prices.
MARKETS: European and US stock markets cemented strong gains made in Asian markets after China signalled more support for its spluttering economy and US data showed a strong labour market and accelerating factory output.
Oil prices climbed about 7% and the US dollar weakened.
CORONAVIRUS: Adding to positive sentiment, new cases of people with COVID-19 and showing symptoms of the disease in mainland China declined for a second straight day.
NICKEL: LME nickel fell 8% to $41,945 a tonne - the maximum allowed under new LME rules - as soon as the market opened, with only eight contracts traded.
Trading has made a chaotic resumption after being suspended last week when a short squeeze sent prices above $100,000. Nickel currently costs around $35,000 on the Shanghai Futures Exchange.
RUSSIA: The invasion of Ukraine entered its fourth week, with limited progress in peace talks.
The conflict has disrupted Russian and Ukrainian commodity exports and raised the cost of energy used by metals smelters.
GLOBAL ECONOMY: The Ukraine crisis could knock more than 1% off global economic growth this year and add 2.5% to inflation, the Organisation for Economic Co-operation and Development said.
INTEREST RATES: Investors are racing to work out how much monetary policy tightening the US economy can handle as the Federal Reserve embarks on its rate-hike cycle.
METALS PRICES: Benchmark copper was up 2.3% at $10,280 a tonne, zinc rose 0.5% to $3,826.50, lead was flat at $2,252.50 and tin was down 1.8% at $41,500.
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