Base metals rise as dollar rally ebbs, trade fears cap upside
LONDON: Base metals recovered on Wednesday, with nickel moving off an 8-1/2 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.
U.S. President Donald Trump said on Tuesday the United States was taking a tough stance with China. That cemented expectations that fresh levies on Chinese exports will soon be announced.
All the same, the dollar, which has benefited from heightened trade tensions, slipped versus a basket of currencies, making dollar-priced metals cheaper for non-U.S. 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.
* PRICES: Three-month nickel on the London Metal Exchange was last bid up 1.2 percent in official midday rings to $12,375 a tonne, having hit its lowest since late December at $12,085, while bellwether copper traded up 0.8 percent at $5,906.50 a tonne. Zinc, used to galvanise steel, climbed 2.2 percent to $2,361, having hit its lowest since mid-August on Tuesday.
* ALUMINIUM: Aluminium traded down 1 percent in rings at $2,023 a tonne, after falling 2.4 percent in the previous session.
* ALUMINIUM TECHNICALS: Three-month aluminium traded at a discount of $39 a tonne to the three-month price as the market continues to discount the possibility that supplies from Russia's Rusal will be unavailable due to U.S. sanctions.
* NORILSK: Norilsk Nickel analyst Alex Khodov said the global nickel deficit would be 90,000 tonnes in the first eight months of 2018 and reach 120,000 tonnes by the year-end.
* CONGO: Democratic Republic of Congo's mines minister said a new mining code signed into law in March that hikes royalties and taxes cannot be called into question. Congo is Africa's top copper producer.
* OTHER METALS: Lead was last bid up 1.8 percent in rings at $2,001 a tonne while tin traded down 1.3 percent at $18,800.